International Prices and Exchange Rates Drive UK Inflation Dynamics
The study looked at UK inflation using a new method called the "trendy" approach. By analyzing long-term trends and short-term fluctuations, the researchers found that international prices and exchange rates have a big impact on UK inflation. Other factors like slack and inflation expectations also matter, but not as much. This shows that UK inflation is influenced by global events, and helps predict when inflation will go back to normal and when to adjust monetary policies.