If you have been intently watching the news of late, you may have heard that the inevitable happened and the UK’s Consumer Prices Index (CPI) inflation rate increased. What may have surprised you though is by how much! Currently sat at 3.1%, this inflation rate is the highest rate it has been in nearly six years. The increases come as a consequence of the fallouts from Brexit; economists had predicted that the inflation rate would stay at a flat 3%; however, the headlines demonstrate otherwise. It is now the responsibility of governor Mark Carney to put pen to paper to explain to Chancellor Philip Hammond why the inflation rate has increased by an astonishing rate (over 1% higher than the target set by the Treasury).
Affecting a number of industries, the inflation rate is set to cause some interesting and possibly turbulent events over the next couple of months. Industries such as food, transportation and medical care are particularly at risk of being adversely influenced by the inflation rates as consumers pinch their pockets in response to the rising costs of goods. Essential raw materials and goods, such as oil and petrol, are also seeing their prices continuing on an upward trend which trickles into the rising costs of other products and services.
The worry for many is whether the inflation rate is set to increase further over the coming months. Whilst the Bank of England is trying their best to reassure the public and business owners alike that no major hikes will be introduced to the inflation rates – and any other subsequent increases will be subtly introduced – many have scrutinised these statements as being reliant on a positive result of the Brexit deal, where evidence speaks to the contrary.
One devastating result of the decision to leave the EU was the sharp decrease in the value of the pound which subsequently resulted in the higher costs of imports; this event then resulted in the increasing rate of inflation. However, as news hit of the UK’s employment figures, the value of the pound began to slowly edge higher in recent exchange rates.
Despite this, the inflation impact on consumerism in Britain will be sorely felt by many industries as the price of real wages still continue to grow slowly in relation to the growing prices of goods. Not the best news for retailers in the run-up to Christmas!
If you want to discuss how inflation rates will impact your business and devise ways to prepare your business for a hit in sales, get in touch with our cost reduction consultants today. We can help your enterprise cut substantial costs in a number of areas of business operations.