The two faces of inflation

Article Abstract:

UK inflation can be measured in terms of output prices and retail prices. Output price inflation is dropping and could fall to 1% by the end of 1996, but retail price inflation is likely to continue to be high. There is a debate as to whether retailers will continue to compete on price as demand intensifies. There is concern over a possible drop in the value of pound sterling which would be more serious if commodity prices were also to rise. Wage inflation may also cause problems.

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UK inflation: inflation falling

Article Abstract:

UK inflation could drop to 2.5% in late 1996 and stay between 2% and 2.5% in 1997, according to Salomon Brothers' Michael Saunders. Wage agreements appear to have stabilised and manufacturing price inflation is dropping. Consumer spending could increase but this may be offset by reductions in inventories. Capacity constraints may not be a problem since the economy could have enough spare capacity. A period of five years with inflation at under 4% is exceptional in the UK.

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