A higher oil price will first and foremost cause a cost-push inflation because oil is used in the production of most of the goods - so we can expect higher petrol and energy prices. As a result, producers will face increased raw materials costs as oil has a knock-on effect on other energy sources, including gas, coal and nuclear power. This leads to firms increasing their prices and decreasing the total output – so the economy will be growing slower.

SHAHRUKH AHMED KHAN    SEC-B