The “direct price-increasing effects from US tariffs to UK prices” could be “less than feared” as the main imports, including refined oil, are unlikely to experience cost increases on account of tariffs, Ms Dhingra said.
Future growth in the world economy hinges on how US tariffs affect global trade, although the impact on UK inflation could be less than feared, a Bank of England interest rate-setter has said.
Speaking at the 2025 Dow Lecture for the National Institute of Economic and Social Research (NIESR), she said: “After a sharp recovery from the pandemic, the world economy has stagnated and its future growth will depend on how global trade is affected by the significant shift in US trade policy.”.
“On the overall impact on inflation in the UK, the direct effect of US import costs and dollar strengthening are likely to be offset by reduced global price pressures.”.
The impact could instead be felt in how the countries that are subject to higher tariffs choose to pass on additional costs to the UK market, she said.
