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Concern: The “Taylor Swift effect” could add to the Bank of England’s inflation headache
Economists believe the “Taylor Swift effect” could exacerbate the Bank of England’s inflation headache.
But they have urged rate-setters not to take notice as they mull over when to cut interest rates from 5.25 percent.
The “Swifties” – the American singer’s fans – spent huge amounts of money on tickets, travel and hotels for her June concerts in Edinburgh, Liverpool, Cardiff and London, and are likely to have driven up inflation in the services sector, a move that worries Bank officials even though inflation has fallen to 2 percent.
And that could mean the Bank will not cut interest rates on August 1.
With June inflation data due this week, Capital Economics forecast inflation at 1.9 percent, while services inflation at 5.7 percent.
Without Swift, inflation would be 1.8 percent and services 5.5 percent, analysts estimate.
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