Inflation could reach 5 per cent by Christmas, says IEA Expert
Julian Jessop, Economics Fellow at free market think tank the Institute of Economic Affairs, responded to ONS consumer price inflation figures for August 2021
“After the jump to 3.2 per cent in August, UK consumer price inflation is on track for at least 4.5 per cent by Christmas – and perhaps as high as 5 per cent.
“Some of the upward pressures on inflation should be temporary, including higher energy costs and ‘base effects’ in the annual comparison. For now at least, medium-term inflation expectations are also still quite low.
“However, these temporary upward pressures have turned out to be both stronger and longer lasting than expected. Why take the risk that higher inflation becomes baked in?
“A sustained increase in inflation will also wipe out any benefit from the pick up in underlying pay growth, which the ONS has estimated at between 3.6 per cent and 5.1 per cent.
“The Bank of England should therefore take the foot off the accelerator by ending quantitative easing, rather than continuing to pump more money into an economy which is already overheating.”
Notes to editors
Contact: Emily Carver, Head of Media, 07715942731
IEA spokespeople are available for interview and further comment
Latest News from
Tax bumper pandemic profits to kickstart a fairer and stronger post-crisis economy, says IPPR22/09/2021 14:20:00
In a major publication ahead of the party conferences of the two main parties, the IPPR think tank has set out a vision for the economic recovery that rebalances power and spreads prosperity across the country.
IFS - Response to the latest ONS public sector finances data22/09/2021 10:05:00
Isabel Stockton, Research Economist at the Institute for Fiscal Studies responded to the latest ONS public sector finances data
IEA expert responds to ONS public sector finance figures22/09/2021 09:05:00
Julian Jessop, Economics Fellow at free market think tank the Institute of Economic Affairs, responded to ONS public sector finance figures for August 2021
IFS - No jobseeker’s paradise: vacancies above pre-pandemic levels, but only in low-paid occupations, and competition for jobs is still higher than pre-pandemic for most21/09/2021 12:20:00
Despite overall job vacancies climbing above pre-pandemic levels
Taxpayers should not bail out energy firms, says IEA expert20/09/2021 13:10:00
Julian Jessop, Economics Fellow at free market think tank the Institute of Economic Affairs, responded to reports that taxpayers face a multibillion pound bill to bail out energy companies
IFS - Higher education enables graduates to move to places with better career prospects – but this leads to brain drain from the North and coastal areas17/09/2021 11:20:00
By age 27, graduates are 10 percentage points more likely to have moved away from the area where they grew up than otherwise similar non-graduates. Graduates who move tend to move to London and other affluent cities and experience large gains in earnings. This suggests that higher education enables people to move to areas that offer better labour market opportunities.
JRF - New Cabinet faces living standards crisis if they go ahead with cut to Universal Credit16/09/2021 15:20:00
JRF responds to House of Commons debate on the planned cut to Universal Credit and Working Tax Credit.
Civitas - Two Tests for UK Trade: Does seamless, tariff-free trade boost exports and does distance matter?16/09/2021 14:20:00
During the UK’s departure from the European Union, debate about UK trade policy was dominated by two assertions:
IEA - Think tank helped ensure UK-EU FTA “against the odds”15/09/2021 14:15:00
The Institute of Economic Affairs has reached the final of this year’s Templeton Freedom Award, which celebrates organisations that have made a meaningful impact on the proliferation of free market ideas through education, policy research or media outreach.