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  •  Inflation

Click to read the article below and then answer the questions:

UK inflation jumps to 2.1% and tops Bank of England target

  • ‘The price of consumer goods rose 2.1% in the year to May.’ Does Andrew Bailey, Bank of England Governor, have to write to the Chancellor to explain the overshoot? Explain your answer.

  • With reference to the chart, explain whether prices were rising or falling during the months August 2018 — January 2019.

  • Rising commodity prices are one of the factors fuelling inflation. With reference to the chart — compare the price of Brent crude during the period shown.

  • Using a diagram, analyse how the reversal of cuts to VAT for the hospitality sector is likely to increase prices.

  • Discuss whether cost-push or demand-pull pressures are likely to provoke the greatest upside inflationary pressures in the coming months.

Gavin Clarke, Emmanuel College

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