Finance News

Inflation Rates Stop Falling – Budgets Squeezed Afresh

There has been some great news for consumers in the last few months as inflation rates kept getting lower and lower. There was a very real hope that they may come in line with, or even drop below, the very low wage rate increases that the country is currently experiencing.

However, that has come to an abrupt stop as the Consumer Prices Index figures for July are expected to show no fall in inflation. There are a number of factors behind this, but the largest is that petrol prices have gone up recently, offsetting a fall in food prices and resulting in the stagnation.

Since the beginning of the financial crisis, people have seen their wages frozen whilst the cost of living got ever and ever higher, squeezing their household budgets more and more.

It was welcome relief when announcements were made about inflation finally beginning to slow down, and people had looked forward to seeing their income going that little bit further. This news is certainly disappointing.
However, it’s hoped that inflation rates may begin falling again in future, especially over the next few months. Petrol prices should be reigned in and food prices will continue to fall for the moment.

On the slightly longer term, however, people are not as optimistic. A drought in the grain basket of the US will affect the harvest, something that will not have an effect until we’re closer to the end of the year, and it’s possible that oil prices could rise once more if further tensions develop in the Middle East.

Ultimately, it’s difficult to determine what may happen, but it is certainly worth being cautious when it comes to spending habits. Though there may be a windfall in the short term, having something extra set aside to help if things do get worse will certainly be no bad thing.