Inflation in the Uk

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MYP Economics

Inflation in the United Kingdom

What is Inflation?

Inflation is the general increase in prices of goods and services in an economy. When the purchasing power falls, currencies tend to lose some of its value. A measure of price in inflation is the inflation rate; it’s the annualized percentage in a general price index (also known as CPI) over time. Inflation is very infrequent and the price level is as likely to fall, as it is to rise. The inflation rate of a country may be influential on corporate level judgments on topics like investments and to the everyday consumer through their savings. If Inflation increases in an economy drastically, it will cause recessions, and debt relief.

United Kingdom’s Economy

The UK enjoyed steady economic growth during Labour’s ten years in office, the longest uninterrupted period of growth in 200 years. It had been helped by a strong world economy, and by rising immigration and public spending. Tony Blair was in power for 10 years and during his rule, he saw 40 successive quarters of economic growth, one of the highest rates of major developed economies and certainly the strongest of any European nation.

The United Kingdom is second largest country in terms of purchasing power and the sixth largest economy in the world by nominal of GDP (Gross Domestic Product). Over the past decade the United Kingdom have had a generally stable industrial relations and moderate unemployment rates. In 2008, the UK were forced into entering a recession due to the global financial crisis. In the first quarter, the UK released their GDP, which was to be -4.2%, prior to the previous quarter, being -1.2%. Gladly in the first quarter of 2010, the United Kingdoms GDP increased by 0.6%. This was a clear sign that the UK was to undergo an on-going period of gradual economic recovery.

What is Consumer Price Index (CPI)?

The consumer price index (CPI) is a weighted price index that measures the monthly change in the...
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