The Effects Of Inflation On Economic Growth

Decent Essays

Inflation is an important indicator of whether a country 's economy is healthy. Therefore, many countries are trying to reduce the inflation rate of domestic. However, it not only brings drawbacks. Since 2014, the inflation rate of Britain is continuing to rise. (Ferreira,2017, no page given) Inflation is a fall in the purchasing power of money leads to people spend much money on buying cheap goods. The inflation rate is the change in average prices in an economy over a given period of time. (Anderton,2008, page.496) This essay will discuss that the impact of inflation on economic growth. It will be argued that the impact of United Kingdom exits the European Union on inflation and how it is changing.

The main two types of inflation are …show more content…

It also will be push demand-pull inflation to increase.

Moreover, cost-push inflation means the supply side of the cost increase caused by the general price level continued to rise. From July 2016 to now, the United Kingdom inflation rate increased from 0.6% to 1.8%. (Ferreira,2017, no page given) It might be affected by the Brexit and the impact might be profound and interlocking. Two months after the Brexit referendum vote, the Office for National Statistics said “rising food prices and air fares pushed prices higher.” (BBC News,2016, no page given) If inflation is counting increase, employees may ask higher wages and thus it will temporary push cost-push inflation. Due to the Brexit, the devaluation of the pound in a short time. At the same time, increasing the cost and price of the manufacturer 's imports, the result is people 's purchasing power declined. Although, there are a large number of product reserves, people only buy daily necessary goods. In addition, Import and export push inflation because as the price of imported goods rises and increased exports. The European Union is the UK 's largest export destination and source of imports. (Digital,2016, no page given) In 2015, nearly forty percentages of British goods and services were exports to the European Union and imported more than a half from the European Union. (Digital,2016, no page given) British import and export

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