Even those with only a moderate understanding of economics appreciate that inflationary figures have a pronounced impact upon wages, business earnings and ROI in general.

While a great deal of emphasis has been placed upon the domestic and international effects of the Brexit, inflation will have just as much of an important role in the coming months and years.

What do the experts have to say, can we draw any generalised predictions from these statements and what can businesses look forward to?

The Broad Strokes

It is first prudent to view the impacts of inflation from a macroscopic standpoint. Higher rates of inflation are generally associated with rising prices and an increased cost of living.

This directly equates to businesses having to pay more to maintain their operations. A weakened pound will therefore not purchase as much as it would have in the past.

These observations seem to have been once again confirmed. The British Chambers of Commerce recently stated that household budgets during 2018 are likely to suffer even though the domestic economy is set to grow more than expected.

They currently predict that the economy will grow by 1.4 per cent throughout the remainder of 2017. This forecast has been upgraded from the 1.1 per cent previously stated in December 2016.

The Other Side of the Coin

Judging from the previous section, we would expect that UK businesses may be in for a rough road ahead.

However, Michael Hewson at CMC Markets states that inflationary rates of 2.3 per cent might not necessarily have as much of an impact upon wages as other entities such as the Bank of England predict.

He observes a level of resiliency; specifically in relation to the rather low unemployment rates currently witnessed across the board. The real question is whether or not soon-to-be released figures will serve to provide a bit more buoyancy to the pound.

Long-Term Perspectives

Of course, many investors and businesses alike are looking at inflationary rates from a long-term perspective. Some analysts see a moderate trend in the coming years. Many actually predict that figures will slacken to approximately 2.2 per cent by 2020.

This is all still conjecture and such observations will partially depend upon the long-term effects of the Brexit (particularly in relation to the effects upon domestic enterprises).

If we assume that inflation will play more of a pronounced role, businesses may very well have to tighten their budgets accordingly. This is arguably one of the reasons that some analysts are taking much more of a conservative approach.

The main confounding factor is how the Brexit will influence GDP and domestic growth in general. As such circumstances are entirely novel, it will be quite interesting to see what the near future may hold.

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