Friday, October 8, 2021

What is the UK's inflation rate and why is the cost of living going up?

https://www.bbc.com/news/business-12196322 


Energy bills, grocery bills, and other household costs are increasing in the UK. Prices rose by an average of 3.2% over the last year and the Bank of England suspects that it could increase to above 4% by December and stay that high into the spring. Why is this happening? The demand for oil and gas has increased worldwide which has pushed the price up. This impacts household heating bills and businesses that run machinery, heat offices, and transport goods. The increases in costs for businesses are often then transferred over to consumers when they buy the products. 

There are supply shortages all across the world which are impacting countries everywhere. Bottlenecks have been occurring in building materials and computer chips which is increasing prices. The government is unwinding the support it gave businesses during the pandemic which has resulted in an increase in prices for those business's goods. Finally, businesses are struggling to find workers as a result of the pandemic and Brexit. This also makes it more difficult for businesses to meet demand and pushes costs up.

How will this change in the UK economy impact the United States? It likely will decrease the number of tourists going to the UK, thus decreasing demand which may allow for stabilization between demand and supply.

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