When I started teaching economics in the early 2000s, I remember quite a few commentators predicting imminent house price falls because house prices were overvalued by historical trends, I used to occasional dip into house price crash forums to see a debate about when prices would fall. Yet, since 2000, even accounting for the financial …
Latest UK housing market stats and graphs. Including house prices, Price to income ratios and construction of new housing.
Higher interest rates increase the cost of borrowing, reduce disposable income and therefore limit the growth in consumer spending. Higher interest rates tend to reduce inflationary pressures and cause an appreciation in the exchange rate. Higher interest rates have various economic effects: Effect of higher interest rates Increases the cost of borrowing. With higher interest …
Readers Question: As the cause of inflation to a large part is down to energy costs, if they are temporary, will we see large deflation if we see a return to something close to ‘normal’? Typically deflation would be a bad thing, but in this case would it be? Firstly, you are correct a large …
In March 2022, the EU, US and other western countries introduced a range of sanctions on the Russian economy. These sanctions have hurt the Russian economy, but they are also causing unprecedented strain on the West and Europe in particular. The big economic threat to Europe involves: Higher inflation from rising energy prices Threat of …
In the aftermath of the invasion, the Russian Ruble rallied, becoming one of the best-performing currencies in the world. This perplexed many commentators, who assumed sanctions on Russia would lead to rapid economic deterioration. But, the strength of the Russian Ruble masks the underlying reality. The high value of the Ruble was due to stringent …
In theory, there is a strong link between the money supply and inflation. If the money supply rises faster than real output, then prices will usually rise. This means if a Central Bank prints more money, we will often (though not always!) get higher inflation. Explanation of why increased money supply causes inflation The money …
Profit-push inflation is when firms use their market power to put up prices, contributing towards inflation. It is a form of cost-push inflation. Profit-push inflation is sometimes known as ‘greed inflation’ and is related to price gouging. Profit push inflation is not the primary cause of inflation, but it can accelerate existing inflationary pressures. Profit-push …