U.K. Inflation Breaks Through BOE Target at 2.3%

The video discusses the UK CPI basket, focusing on food, fuel, and recreation prices, which are sensitive to sterling. The fall in sterling is affecting inflation faster than expected by the Bank of England. Despite external inflation, domestic cost pressures remain low, with wage growth stagnant. Inflation is now matching wage growth, impacting real income and potentially affecting the economy. The video also covers base effects and forecasts inflation to peak at 2.7-2.8% by the end of 2017, with temporary effects like a surge in food prices due to poor harvests in Europe.

Which items in the UK CPI basket are particularly sensitive to changes in sterling?

• Food, fuel, and recreation prices

• Transportation and communication

• Housing and utilities

• Healthcare and education

What is the current state of domestic cost pressures in the UK?

• They are increasing rapidly

• They remain quite muted

• They are fluctuating unpredictably

• They are decreasing significantly

How does the current inflation rate compare to annual wage growth in the UK?

• Inflation is running at the same pace as wage growth

• Inflation is unrelated to wage growth

• Inflation is lower than wage growth

• Inflation is higher than wage growth

What is the predicted peak inflation rate for the UK by the end of 2017?

• 3.5-3.6%

• 1.5-1.6%

• 2.0-2.1%

• 2.7-2.8%

What temporary factor has recently affected food prices in the UK?

• Increased import tariffs

• Bad harvests in Europe

• New agricultural policies

• Improved local production