Taylor Swift, the famous American singer, is becoming a subject of study for British economists. Her "Eras Tour" in London this weekend could have repercussions for the British economy, and more specifically for the Bank of England's monetary policy.
James Rossiter, macroeconomic strategist at Toronto-Dominion Bank, points out that the hype surrounding his concerts is generating such large crowds that hotel prices in the tour cities are rising significantly. These increases, already seen in the past during major events, are particularly noticeable in medium-sized cities such as Edinburgh and Liverpool, where hotel capacity is rapidly saturated, leading to higher rates and, consequently, an impact on inflation.
At a time when central bankers are trying to anticipate inflation trends over the medium term, price spikes linked to one-off events such as a concert can blur their reading of the economic situation. That said, such events can also reveal consumer confidence and willingness to spend on experiences, despite an uncertain global economic backdrop.
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