PSigma income manager Bill Mott believes UK inflation problems are likely to be temporary if wage rises are kept under control.
Mott considers that the majority of domestic inflation concerns are docile, with the problem coming from spiralling oil and food prices.
He says inflation is likely to reach its peak in the latter half of this year, with the only concern being that oil and food prices will take another upward spike.
He says: “Another upward spiral is unlikely. I think that inflation peaks are nearing and the only concern is that these rising prices seep into wage concerns and lead to wage inflation. It is important that there are tight wage restraints to offset that possibility.”
Bank of England governor Mervyn King and Chancellor Alistair Darling have called on companies to show restraint on wage increases in the face of higher inflation.
Mott says global inflation concerns rest in the hands of emerging markets. He says: “I think they can control that growth and also impose wage restraints.”
Hargreaves Lansdown head of research Mark Dampier says: “This is what we are all hoping for but all bets are off if Gordon Brown gives in to the public sector and renegotiates 6 to 7 per cent wage rises.”
Premier Asset Management senior investment manager, global equities Mike Jennings says: “I am sceptical these problems will not reach people’s wages. Emerging markets are a greater concern, as food is 33 per cent of the consumer price index there. Food is a far bigger issue for them if prices continue to rise. The same can be said for energy in the likes of China where tariffs have been in place.”