During the last year in which many Western nations have experienced high levels of inflation, there have been official figures which have been relatively conservative estimates, and unofficial figures which have suggested that inflation in the United States and Britain has been into double digits for quite some time.
It is, however, the official figures which tend to have an impact on the currency and stock markets, therefore today’s revelation that the British economy has begun to experience 10.1% inflation is of great interest.
The news channels this morning were quick to highlight the inflation level going over the 10% threshold, however very little effect has been shown with relation to the value of the British Pound against the Euro or US Dollar.
This is perhaps because the anticipation has been steadily building over time, hence this is perhaps not a surprise, and generally it is surprises that tend to create sudden volatility in the financial markets.
What it does depict is that double digit levels of inflation in the UK have been reached, and this is not a good sign for the economy which continues to decline. The British Pound today remains at around 1.12 against the US Dollar, continuing its low value which, despite a few small movements upwards over recent days, represents a steady decline over the past weeks which followed a long period of rapid depreciation.
What we perhaps can learn is that despite the new Chancellor of the Exchequer Jeremy Hunt having almost completely reversed the mini-budget issued by recently installed Prime Minister Liz Truss, a clear sign of an unstable government and a weakening economy, the Pound has not suddenly crashed to even lower levels.
Perhaps it has bottomed out, or investors and traders have understood that the declining economy and suddenly unstable government in a usually extremely stable and calm nation is now a relatively long term matter, and that the state of the economy is now somehow measurable.
Therefore, despite the sensationalist headlines, the value of the Pound against its Western major peers is a case of business as usual.
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