UK Inflation Forecasted to Quadruple Next Year

The British public are in for a nasty surprise.

Inflation is expected to quadruple to nearly 4% in less than a year, making everyday items much more expensive, according to a report by the National Institute of Economic and Social Research.

The independent British think tank forecasts that inflation will rise sharply and peak at 3.9% in the third quarter of 2017 as a result of a crash in the value of the pound triggered by the U.K.’s decision to leave the European Union.

The currency fell as much as 20% versus the U.S. dollar, and 17% versus the euro, in the months after the Brexit vote in June, although it has steadied a bit in recent days.

When the pound goes down, the cost of imports rises. That pushes up inflation.

via CNN

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza