There are fears that the UK economy is weakening at such a rate that it will be the first G7 economy to face stagflation.
The Governor of the Bank of England has already expressed his fears that hiking rates too quickly will slow the economy to such an extent that the Central bank will actually contribute to the overall malaise facing the economy, rather than achieving its goal of lowering inflation.
Rising inflation has led to a fall in retail sales as household budgets have been hard hit, causing consumers to be more considerate in making purchases. Online sales have been particularly badly hit, as the country’s emergence from the pandemic also contributes to a slowdown of shopping via the internet.
Despite the drop in retail sales, falling by 1.4% in February, they were still 2.2% above pre-Covid levels according to the Office for National Statistics.
The rising inflation crisis looks set to continue as factory gate prices were cited by manufacturers as a significant contributor to price rises according to flash data released yesterday.
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