Inflation threat

Article Abstract:

United Kingdom interest rates and inflation could increase by more than forecast in 1998, according to Charterhouse's Richard Jeffrey. The Bank of England forecasts a slowdown in UK economic growth in 1998, and this is likely to occur, but not by enough to control inflation. Consumer spending is increasing due to sharp rises in persnal incomes, and capital spending is also increasing. Gross domestic product could rise by 3% in 1998, which is above sustainable levels. Wage inflation is likely, and the impact of a strong pound sterling on depressing infaltion is likely to weaken.

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When history is not bunk

Article Abstract:

United Kingdom inflation is likely to be under the 2.5% target set by the government, but the Bank of England sets interest rates in line with inflation forecasts two years ahead, rather than current inflation. Lower import prices have helped depress inflation, but this could change, as could the amount of spare capacity that the UK economy has, which could also push up inflation. Low unemployment has still not led to a rise in prices, and this means that pressure from wage inflation is low. There are also uncertainties about how far inflation can be predicted.

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Inflation danger

Article Abstract:

United Kingdom interest rates are not likely to be lowered in 1998, according to Goldman Sachs, and rates could even be raised. UK economic growth is slowing but there is inflationary pressure from the tightness of the labor market. Wage costs could push inflation above the government's target, and this will not be offset by the high value of pound sterling, since the pound has started to fall in value. Unemployment appears to have dropped below the level at which inflation is not a problem, and this occurred in 1996.

Economic policy

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