GET READY, BRITAIN: Inflation is coming back

These are the charts everyone was hoping we’d never see again: inflation in Britain, way above 3%.

As pessimism over Brexit and next year’s Article 50 trigger weigh down the pound, everything in the UK is going to get a little more expensive than it used to be. Unfortunately, because a declining pound is also going to hold back the economy, don’t expect to get a pay rise to compensate.

Here are current inflation expectations, via Credit Suisse (the “cable” is the value of the US dollar to the pound):

Pantheon Macroeconomics chief UK economist Samuel Tombs just published a book of charts on the effect of the declining value of the pound. He also thinks inflation will hit 3% next year:

The consumer price index is heavily influenced by the movement of the pound:

But employer surveys show they aren’t expecting to increase wages anytime soon:

Here is the cause: The pound used to buy $2 a few years ago. Now it only gets you $1.22. That’s because investors are betting that Brexit is going to be bad for Britain, and they’re moving their money out of the currency:


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