Is the world heading for stagflation?

Inflation is on the rise again due to rising food and oil costs. But whilst inflationary pressures linger, the UK economy is set for a downturn as higher interest rates begin to bite.

Inflation is on the rise again. The annual rate of consumer price inflation jumped to 2.1% in October from the previous month's 1.8%, exceeding the Bank of England's 2% target for the first time since June.

High oil prices accounted for the lion's share of the increase, while dearer food up from 3.7% to 4.7% also offset falling gas bills.

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