Tuesday, October 6, 2009
Why inflation is on the cards in UK
Even after nobody wants dollars and its slide, price of $ valued commodities rose sharply like gold ($1036/ounce) and oil ($71/barrel). But if you see the exchange rate for UKÂ£ against major currencies you will see red against everything even US$. What that means is UKÂ£ is falling faster then even USD. As we import most of what we consume you are likely to see a rise on CPI rather than deflation. Also note that this does not help businesses in export as it raises the cost of production and hence become uncompetitive.