Inflation in the UK after COVID-19

Abstract

Since January 2020, UK faced a serious epidemic and this COVID had a significant impact on the UK' s economy. In order to make the UK's economy recovered, Bank of England set the monetary and fiscal policy and injected many liquidity into the market to stimulate public's buying demand. After around one and a half years, the inflation grew alongside with the UK economy growth and finally the inflation has reached a historical high level over the past few decade. This essay mainly gather the information from different UK's data website, some news website and bank of England’s official website to introduce the recent inflation and interest rate in UK, analyze the reasons of nowadays high inflation, presented the central bank's recent policy and discussed the prediction of the future inflation and central bank’s policy towards the high inflation. The main findings are that the previous' bank of England’s policy during the COVID-19 period and Russia and Ukraine were the mainly causes and reasons for the nowadays' high and continuous inflation. For the prediction, the inflation in UK is forecast to continue increasing in the short period of time (the end of 2022 and the early of 2023) and it will decrease since the start of late 2023 and be back to the normal stage. Bank of England will continue increasing the bank rate to battle the inflation in the short period of time and then stop add bps and gradually make the bank rate back to the normal value.