Economic report

Economic data Economic environment | Inflation rate | Consumer Price Index (CPI) | GDP growth rate | Gross Domestic Product (GDP) | Interest rate | Unemployment rate | UK | 2.1% | 126.97 | 0.8% | 2.435 trillion USD | 0.5% | 7.6% | France | 0.7% | 127.46 | -0.1% | 2.613 trillion USD | 0.25% | 10.5% |

Inflation
Inflation is the overall rise in prices in the economy. For example, a 5 per cent inflation rate over the past 12 months means that the average increase in prices across the economy throughout the previous year was 5 per cent. In the UK, Inflation is measured by the variation in the Consumer price index (CPI). It’s a measure used to estimate the price change in a basket of goods/services consumed. Each month, around 12,000 prices of more than 600 goods/services are taken around the UK and from all different types of business (including online businesses) which sell the products to consumers. An average price for that month is worked out and then converted. The month’s statistics can then be compared to last month’s average price to calculate the percentage rise in prices over the period. Inflation can impact on businesses in the UK, because if inflation is high, businesses won’t be aware of what the prices will be in a couple of months’ time, let alone a couple of years. However, decisions have to be made which will affect the business in the long-term as it is creating uncertainty. Also if prices rise, consumers will be less willing to borrow money because of not knowing what will happen in the future. Value of savings will fall as inflation erodes consumer’s real value so they will have to save more to make up savings for their previous real value. Increased savings means less spending, so businesses will save less. Suppliers will also rise in their prices of goods/services so this would mean that the businesses will be charged more. If