Rising inflation and its impact on you

ended 16. November 2021

Tomorrow morning @ 07:00, the Office for National Statistics is publishing the latest inflation data. Only yesterday, Bank of England Governor, Andrew Bailey, expressed his unease about inflation, which many predict will rise above 5%. We want to know:

  • How is inflation affecting you and/or your business?
  • Are you having to increase your prices to reflect the rising cost of living and/or increase in the cost of many (raw) materials?
  • Should the Bank of England raise rates in its next meeting to contain inflation and ‘get ahead of the curve’?

As ever, soundbites, not War and Peace. Journalists like short and punchy comment, not elongated essays!

6 responses from the Newspage community

Star Quote
"With inflation printing above 6% in the US last week, the Bank of England's claim that UK inflation is just transitory is starting to wear thin. Yes, there are supply chain issues causing price increases, but does anyone really expect those prices to fall afterwards? Prices tend to be very sticky and, as we all know with the cost of a pint, once they go up they stay up. "The Bank of England should raise rates at the next meeting. Governor Andrew Bailey, like his predecessor, is at risk of being seen as the "unreliable boyfriend" who makes promises and then doesn't follow through. Even a small rise still only takes us marginally above 0% and it would be the prudent thing to do."
It's a 2 way street, which continues to hit us on both sides. As a business owner I'm seeing costs rise across the board, the biggest challenge is trying to contain these but realistically these are going to have to be passed on to clients if we are to survive. The other side of the coin is the affect it's having on making necessary longer term decisions about hiring and growth. Quite frankly, it feels like your head is on fire, and you're trying to put it out with a hammer!
"For me, this is one of those heart versus head situations. My head says they should increase interest rates now and get ahead of the curve. Yes it will cause pain, but this really could be a case of no pain, no gain. However, my heart says the economy is still in too fragile a state to stand an increase in interest rates. I think the big worry in is all those people who have started mortgages at record low interest rates for whom an increase of even 0.25% would make a real difference. So will head win or heart win? Your guess is as good as mine."
"It seems we're repeating arguments of ten years ago when there was huge concern around rampant inflation in the face of the then new phenomenon of quantitative easing. With the base rate at 0.5%, the Bank of England 'looked through' rising inflation and left bank rate unchanged, which saw inflation peak at 5.2% in September 2011. Inflation then fell sharply, and indeed the next move in base rate was a cut following the Brexit referendum in 2016. Fast forward to 2021 and again inflaion is on the rise, is forecast to peak at around 5% while the Bank of England, so far at least, is resisting calls for a base rate hike."
Star Quote
"Bank of England Governor, Andrew Bailey, should hold off raising interest rates until March 2022. By then, we will have a better understanding of global supply chain performance and how consumer prices and spending reacted to high demand for goods and services in the run-up to Christmas. If consumers had less income at their disposal due to essential spending price hikes, such as food, fuel, utility and heating bills, purchasing power would have been squeezed, which could spur a slight drop in inflation come January or February. However, if it turns out that millions of people opted for online buy-now-pay-later options, we could have an inaccurate picture of where the economy really stands."
"Everything is increasing in cost to my business, which means having to think long and hard about passing on these costs, which itself feeds into the problem of rising costs. Keeping the interest rate at 0.1% was a positive for consumers ahead of Christmas and it gives a last-chance for businesses that need to borrow. With a rate that is marginally above zero, the only way is up. A rise in interest rates is inevitable and this last freeze was a welcome sticking plaster that now needs to be ripped off in 2022 with incremental rises."