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Why is UK inflation rising even though the economy is growing?
UK inflation is increasing due to rising costs in food, hospitality, and labour, despite the economy experiencing a slight growth. Global trade pressures, tariffs, and domestic fiscal policies are also contributing to higher prices, which can happen even when economic growth is positive.
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What does the IMF forecast mean for UK consumers and businesses?
The IMF predicts inflation will average 3.4% in 2025 and slow to 2.5% in 2026. For consumers, this could mean higher prices on everyday goods, while businesses may face increased costs and uncertainty. The forecast highlights ongoing inflation challenges that could influence spending and investment decisions.
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Will higher inflation lead to interest rate hikes?
Higher inflation often prompts the Bank of England to consider raising interest rates to control price rises. This could make borrowing more expensive for consumers and businesses, potentially slowing economic growth but helping to keep inflation in check.
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How is the UK government planning to handle economic challenges?
The UK government is closely monitoring inflation and economic growth, with policymakers debating measures to support the economy. This includes balancing fiscal policies, managing public spending, and working with the Bank of England to ensure inflation remains within target levels.
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What are the main factors driving inflation in the UK right now?
The main factors include rising food and hospitality prices, labour market pressures, and increased costs from taxes and tariffs. Global trade uncertainties and domestic fiscal policies are also playing a role in pushing prices higher.
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Could inflation impact mortgage rates and borrowing costs?
Yes, rising inflation often leads to higher interest rates, which can increase mortgage rates and borrowing costs for consumers and businesses. This may affect housing affordability and investment plans in the near future.