Higher inflation set to increase cost of living
THE UK IS EXPECTED TO ENTER a prolonged spell of increased living costs following the sharp drop in the value of the pound sterling on international trading markets.
Yesterday [Thursday 3 November] the UK central bank projected inflation rises of towards 3 per cent in 2017, and added that inflation is likely to remain above its own 2 per cent target for a further three years.
Higher inflation means price increases for goods and services like food, clothing, fuel, and domestic bills.
The drop in the pound’s value since June’s EU referendum leads to extra price pressures on imported goods, as firms trading in other currencies seek to maintain profit margins in cross currency area deals.
Companies like Unilever, Microsoft, and Apple have already sought to increase costs in the UK by over 10 per cent.
As a warning sign of potential price wars, giant corporate food importer Unilever pressed Tesco to accept a 10 per cent rise in costs – a move which led to certain food products running low on stock in the major supermarket.
The National Institute for Economic and Social Research (NIESR) projected that inflation could go as high as four per cent during the next financial year.
That rate would represent the highest increases in living costs since 2012.
The NIESR expect prices to “accelerate rapidly” during 2017.
Inflation typically hits poorer parts of the population harder is it is more likely to impact basic consumer staples like cheap food.
Picture courtesy of Byronv2
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