Sterling’s fall boosted UK inflation - San Fran Fed paper

Sterling-market

The weaker pound sterling contributed two-thirds of higher UK inflation in the eight months after the Brexit referendum, research published by the Federal Reserve Bank of San Francisco finds.

In an economic letter, Neil Gerstein and co-authors compare price movements between tradable and non-tradable goods to evaluate how much Brexit’s impact on sterling affected inflation. Since the vote, the pound sterling has fallen by roughly 14% and inflation has increased by roughly 1.5 percentage points.

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