As the new year has begun the price of resources is going up again. The main driver is perhaps oil prices. The resource prices have been upwards and now approach the $100 a barrel mark (Times 15/1/2011 page 62). This rise increases the inflationary pressures and could reduce growth significantly. In the Times article oil at $100 per barrel would most likely reduce the gross domestic product (GDP) growth by 0.1% but if it were to rise to $120 a barrel then the growth rate may slip by 0.2%. This news reinforces just how much the economy is tied into the oil economy and brings home the issues that may be around the corner with peak oil.
UK inflation was announced to be 3.7% yesterday according to the BBC. The consumer price index was 3.7% whilst the retail price index (RPI) was 4.8%. One of the drivers behind this inflation was oil and food prices. The RPI figure for the whole of 2010 was 4.6% with heating oil going up by almost 50%. Petrol and diesel went up almost 13%.