EU-15s inflation is 1.8% according to OECD. Does inflation in europe and other economic factors in EU affect CPI inflation in UK? if so, what are these other factors and how might they shape our consumer prices?
2007-10-26 07:36:32 · 3 answers · asked by hollym 2 in Social Science ➔ Economics
The main reason why European inflation can affect UK inflation is due to the mass trade in goods between countries leading to interdependency. Basically if prices in European good rise these increase prices will be translated in the UK market when these goods are exported there. As a result UK consumers arent pressured to keep low prices by low priced imports and thus this gives them more room to "breathe" in terms of the prices they charge consumers. As a result higher EU inflation will lead to UK inflation because UK producers no longer have to keep prices as low to compete with imports or indeed with exporting their goods in the EU market
2007-10-26 08:52:00 · answer #1 · answered by justmoi 3 · 1⤊ 0⤋
Inflation is a mostly monetary phenomenon. As long as Britain retains its currency, the most important determinant of British inflation will be The Bank of England, not Europe...
2007-10-26 17:10:59 · answer #2 · answered by NC 7 · 0⤊ 0⤋
Funny NC, I thought it would be weather or not the Torrie's get in at the next general election
2007-10-26 22:53:17 · answer #3 · answered by Cuddles 1 · 0⤊ 0⤋