Bloomberg UK Politics
The Power of Prices: Does Labour Need To Worry About Inflation?
Nov 20, 2024
Dan Hanson, Bloomberg's Chief UK economist, delves into the UK’s rising inflation rates, which recently hit 2.3%. He discusses the factors driving this increase and its potential to escalate further. Joe Mayes sheds light on the Labour government's concerns about how inflation could impact their political standing ahead of elections. The conversation also touches on the hidden workforce and discrepancies in employment data, highlighting how these elements complicate the current economic landscape and government policy decisions.
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Quick takeaways
- The recent inflation rise to 2.3% in October is influenced by temporary factors like the energy price cap, presenting challenges for the Labour government's fiscal policies.
- New research suggests the UK's labor market could be healthier than previously thought, with potentially lower unemployment boosting economic productivity and wage growth amid inflation concerns.
Deep dives
Rising Inflation and Its Implications
The latest inflation figures for October revealed an increase to 2.3%, surpassing the Bank of England's target of 2%. This uptick is partly attributed to the energy price cap in the UK, which suggests a short-term fluctuation rather than a sustained trend. Experts anticipate that inflation may hover around 2% to 3% over the next year, mainly influenced by upcoming adjustments like increases in private school fees and the national minimum wage. The persistent inflationary environment raises questions about potential implications for interest rates and the government's fiscal policies.
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