What does rising inflation mean to you?
The situation is likely to get worse before it improves, with Bank of England has forecast an inflation rate of 11% this year.
The current spike means that prices of everyday items such as staple foods – especially fruits and vegetables – fuel, clothing, shoes and furniture have all risen in the last year, a developments that are most likely to hit low-income families at a time when they can least afford it.
Charities have reported increased sales and demand for second-hand clothing as rising production costs make high street fashion the most expensive since 1988 when records began.
Grant Fitzner, chief economist at National Statistics Office (ON).
“Rising costs of some household goods and rising rents are also pushing up inflation. However, these were partially offset by falling pump prices, following record highs in late 2021.
“Some of the annual changes this year were affected by last year’s lockdown, when many services were unavailable.”
Rising costs, staff shortages and supply chain disruptions are said to be affecting both big-name retail brands and small businesses, leaving them with little choice, but they must pass the increased prices on to consumers to ensure their own subsistence.
Richard Walker, Iceland’s chief executive, warned Channel 4 News earlier this spring that grocery costs are likely to rise further as the year progresses.
“If you look at the UK supermarket sector, we operate on very tight margins because it is a very competitive industry,” he said.
“So we are not an endless sponge that can continue to increase prices continuously. And I think it’s the perfect storm that’s driving all this inflation. “
Also expressing disappointment was Dolf van den Brink, CEO of Dutch beer giant Heineken, who has warned of price increases for the company’s brands such as Amstel, Birra Moretti and Tiger. .
“In 24 years in business, I have never seen anything like it, not even close. Across the board we are facing a frenzy. he said.
ONS data has meanwhile revealed the extent to which UK wages have stagnated, which means workers effectively cut wages for the last three months of 2021 when their daily cost of living is higher than their salary increase.
Total wage growth accelerated to 4.3% in the quarter to December – from 4.2% in the three months to November – but continued to lag behind inflation, then at 5.4%.
Matthew Percival, CBI’s director of people and skills, said: “The good news is that the UK economy is continuing to create jobs. “The bad news is that businesses that are struggling to hire and pay are not keeping up with inflation.”
All of these follow from Ofgemannounced in February that energy price limitthe maximum amount a utility company can charge an average customer per year, will increase by 54% as of April 1 as a result of soaring global gas prices, causing UK households to The UK increases by almost £700 annually in their electricity and gas bills.
Since that date, the limit has increased from £1,277 to £1,971 for an average household use. Meanwhile, customers using prepaid meters increased by £708 from £1,309 to £2,017.
Prime minister Rishi Sunak responded to that development by revealing an aid package for UK households worth a total of £350 in an attempt to ease the “pain” of rising bills, but for many, his intervention was dismissed as too little, too late.
Then, in response to the rise in inflation, Mr Sunak said the government was listening to people’s concerns about what he asserted was a “global challenge”, and cited the package of discounts and rebates of themselves to address energy bills as proof of state support for struggling families.
“We’re also helping the lowest earners keep more of what they earn by cutting universal credit rates and freezing taxes and fuel to keep costs down,” he added.
“In total, we are supporting more than £20 billion worth of living expenses this financial year and next.”
But that is likely to prove chilling comfort to thousands of UK consumers of steady wages facing higher costs for everything from food, clothing, petrol, heating, insurance. country and housing and rent At a time when interest rates increase, borrowing costs also increase.
While the current outlook does indeed look bleak, consumers are being encouraged to treat current adversity, which will eventually pass, as an opportunity to reassess their individual circumstances. , streamline their finances and cut out any unnecessary regular spending.
“The single most important thing savers can do right now is consider how this environment will affect their finances, where they are currently located,” said Colin Dyer, director of clients at Abrdn Financial Planning. keep savings and make adjustments as needed.
“For example, keeping a substantial amount of cash in a deposit account can effectively deprive money in an inflationary environment, so, depending on the risk attitude, investing in stocks may not be a good idea. ISA stocks and shares can offer greater returns if invested for the long term.”