Tuesday, October 6, 2009

Why inflation is on the cards in UK

Pound weakens

Even after nobody wants dollars and its slide, price of $ valued commodities rose sharply like gold ($1036/ounce) and oil ($71/barrel). But if you see the exchange rate for UK£ against major currencies you will see red against everything even US$. What that means is UK£ 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.

Posted by deepak @ 11:18 PM (494 views)
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