Consumer confidence is one of the key factors in creating a growing economy. When consumers feel more secure with their personal finances, they’re more likely to spend money on luxury or non-essential goods and services. There are many things that have an impact upon consumer confidence, but inflation is one of the most important. An article on Thisismoney.co.uk looks at the latest inflation figures. Here, AJG Direct review this article, and consider the impact it could have on UK businesses.
“Inflation has been relatively stable for a number of years, and this has helped our economy recover from the global economic downturn”, said Paul Gillett, director of AJG Direct. “These recent figures show a slight rise in inflation, so it’s important that wages begin to rise in line with inflation. Confident consumers are creating attractive opportunities for businesses, so it’s important that as much as possible is done to encourage this trend.”
The official figures for October show that inflation currently stands at 1.3%. This is a slight rise from the 1.2% recorded in September, although this in itself was a five year low. The government and Bank of England have recognised the importance of keeping inflation as low as possible. With many private and public sector wages having seen very little, if any, growth in recent years, any significant inflationary rise could hit the pound in the pocket of consumers. Economists are seeing October’s rise as a slight blip, rather than a cause for concern.
Petrol prices fell during the month, yet this is one of the major factors that led to the rise in inflation. That’s because the fall in price at the petrol pumps of 2.5p per litre, was around half of the fall in petrol prices in October 2013. Food prices are continuing to fall. The figures show that the price of food and non-alcoholic drinks was down 1.4%. This is the sixth consecutive month that food prices have dropped. Bank of England analysts expect the inflation figures to start falling again next month, and predict that the inflation figure will fall below 1% within the next six months. This itself could raise worries that deflation could hit the economy, but it will be a big boost to ordinary consumers.
“Inflation is always a delicate balancing act, but the Bank of England is keeping it stable, and our economy on the right course”, said Paul Gillett. “We should see even stronger consumer confidence, and this will be great news for businesses across the country.”
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