Despite the recent fall in UK CPI inflation to 2.8% there is evidence of increasing underlying inflationary pressures in the UK.
- Growth last year upgraded to 2.9% (Source: office of national statistics)
- OECD raise forecast growth rate to 2.7% (slightly higher than the UK’s long run trend rate of growth)
- Rising wage settlements (2% in the last quarter)
- Wages are rising, especially in the financial sector, where bonuses are at the highest since the early 1990s.
- GDP deflator rose to 3.2% in the last quarter. (this is a measure of price rises and is used for converting nominal GDP statistics into real GDP statistics)