The British Inflation Rate Slips for the First Time in 8 Years

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The British Inflation Rate Slips for the First Time in 8 Years

The rate of inflation in Britain slipped below the official target of 2% during January 2017, for the first time since 2009. The fall means that it’s unlikely the bank of England will make any effort to raise interest rates again for the time being.

Official figures that were released during August showed that the consumer prices for interest were up by 1.9% in the year leading up to January, and down 2% from the rate in December. Experts predict that the drop may be a result of retailers choosing to slash their prices on tobacco, alcohol, and furniture-based products.

Assessing the Current Marketplace

The UK marketplace has been in a state of flux recently, following the Brexit results. According to the chief economist at “Markit”, Chris Williamson, the strong economic growth of the country, combined with the falling price of inflation has created a kind of “Goldilocks” set of circumstances.

Financial experts suggest that the policymakers working for the bank of England should be able to keep pushing the country forwards for a little longer thanks to low interest rates – driving a faster and more sustainable recovery for the economy.

Not so long ago, the bank suggested that their key interest rate would remain stuck at the record low of around 0.5% until joblessness throughout the country achieved a more solid solution. Once that unemployment threshold began to grow closer, the governor of the bank Mark Carney chose to update the forward guidance to broaden the range of indicators that would need to be considered before interest rates are raised.

For now, the low inflation numbers should ensure that the bank has all the freedom and versatility it needs to ensure the UK economy has room to thrive and strengthen before any of the current rates are changed.

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