Concerns over market inflation swept across the UK on Wednesday due to the release of new data showing a surge in prices across the nation. According to figures provided by the Office for National Statistics, UK inflation more than doubled in the last month to 1.5%; slightly higher than economists projected.
In an effort to extinguish the alarm surrounding the situation, Laith Khalaf, a financial analyst at AJ Bell, explained that the current levels of inflation are nothing to stress about. The more pressing issue in Khalaf’s mind is the “rising concern that the fiscal and monetary response to the pandemic has sown the seeds of an inflationary scare further down the road.”
While the current inflation rate is still below the Bank of England’s 2% target, the fact that the rise has been rapid has caused anxiety over the possibility that the situation could spiral out of control. There is, however, no evidence suggesting that this is a probable outcome.
Ed Monk, associate director for Personal Investing at Fidelity International, explained that the recent rise in inflation is a sign of recovery from the crippling economic setbacks caused by the coronavirus pandemic. As such, he warned investors to expect volatility in the months ahead.
