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The UK Economy

Published online by Cambridge University Press:  26 March 2020

Carry Young
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Extract

Price inflation in the UK economy has remained below the expectations of most commentators since sterling left the exchange-rate mechanism in September 1992. Latest estimates of inflation indicate that retail prices are now growing at an annual underlying rate of 2 per cent; the lowest growth rate for 27 years. This impressive performance is being sustained by very low growth in labour and capital costs, unit labour costs are estimated to have fallen by 1/2 per cent in the last year, as fast productivity growth has been combined with low growth in earnings.

Type
Articles
Information
National Institute Economic Review , Volume 150 , November 1994 , pp. 10 - 28
Copyright
Copyright © 1994 National Institute of Economic and Social Research

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Footnotes

∗

The forecast was compiled using the latest version of the National Institute Domestic Econometric Model. I am grateful to Andrew Britton, Ray Barrell, Peter Westaway, Andy Blake and Nigel Pain for helpful comments and discussions and to Anne Perrin for her help with the database and charts. The forecast was completed on November 10 1994.

References

Notes

(1) This approach is explained in Nigel Pain and Peter Westaway (1994), ‘Housing, Consumption and Borrowing: An Assessment of Recent Personal Sector Behaviour in the UK’, National Institute Economic Review, August, no. 149, pp.53-64.