First, some basic arithmetic. So far this year, sterling’s trade-weighted index has fallen 5.6 per cent. With imports accounting for one-third of total domestic spending, this implies that the pound’s fall would add 1.9 per cent to the price level if import prices rise one-for-one with sterling’s fall.
However, it’s extremely unlikely that all import prices will rise so much, and even if they do they won’t be passed onto consumers.