On According to Inflation in the UK rose to 3,3% in March, up from 3,0% in February, the Office for National Statistics said.
Fuel prices were the main trigger. Specifically, motor fuel prices increased by 8,7% in a month, the sharpest increase since mid-2022. As a result, production costs rose sharply: raw material and input inflation rose by 4,4% in March, one of the highest rates on record.
Rising inflation is putting pressure on the Bank of England, which must decide whether to raise interest rates to control inflation or keep them steady to support the slowing economy.
Central Bank Governor Andrew Bailey urged caution, unable to predict how long the surge in inflation would last.
Analysts are warning of the possibility of stagflation, where inflation rises and economic growth weakens. Financial analyst Danny Hewson called this a looming risk.
Before the escalation of the conflict in the Middle East, inflation in the UK was expected to approach the Bank of England’s 2% target. However, the situation in the energy sector has completely reshaped this forecast.
Rising inflation once again brings into focus the question of whether Bitcoin act as a hedge against the devaluation of fiat currencies.
In theory, Bitcoin It was created for precisely this purpose. Its supply is limited to 21 million coins, making it resistant to inflation caused by money printing.
However, the current situation is more complex, as it is characterized by external shocks rather than domestic demand. This surge in inflation is driven by energy factors, not monetary ones.
Historically Bitcoin performs well when inflation is associated with currency depreciation, and rising oil prices tend to create conditions for reducing risks in financial markets.
In such conditions, investors often turn away from volatile assets such as Bitcoin, and turn to safer options.
However, higher energy prices will eventually lead to higher government spending, higher debt, or monetary easing, so Bitcoin may benefit as trust in fiat currencies declines.
Currently, against the backdrop of easing tensions in the Middle East, Bitcoin is in an uptrend. After a daily rise of 4,7%, it is trading at $79,426, up over last week remains at 6,6%.
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