"Rising oil and gas prices are once again feeding into the cost base of the UK economy. Transport, manufacturing and logistics are feeling the impact first, but it does not stop there."
"Even with a quick resolution, there would be no sharp drop in inflation. Costs already absorbed by firms take time to unwind, and pricing behaviour tends to adjust slowly on the way down."
"The concern is that the UK may be drifting towards a difficult combination of weak growth and persistent inflation. Economic activity remains subdued, yet price pressures are not fading."
"A path of monetary tightening was (rightly) pursued in 2022 and 2023 as policymakers battled the impact of the Russian invasion of Ukraine and a global energy crisis."
UK inflation increased to 3.3% in March from 3% in February, with expectations of further rises. Rising oil and gas prices are impacting transport, manufacturing, and logistics. Higher input costs lead to broader price increases, making inflation sticky. The UK faces a potential combination of weak growth and persistent inflation, raising concerns of stagflation. The Bank of England's Monetary Policy Committee is unlikely to cut or raise interest rates soon due to these pressures and subdued economic activity.
Read at London Business News | Londonlovesbusiness.com
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