Inflation Rate Rise Highest Since 2013

Official figures recently released show the highest rate of inflation in the UK since September 2013, now standing at 2.7%. This is up from 2.3% in March. Both figures are above the target rate set by the Bank of England at 2%.

So why is this?

It’s a complex set of maths which takes into account spending over a broad spectrum of consumer goods ranging from electricity, car tax, food and clothing. But strangely enough, the main reason for this slight rise was due to higher air fares – thanks to the fact Easter fell later this year than in 2016, pushing up prices of flights to holiday destinations!

When an economy is subject to such flux, sometimes due to such random things, it’s difficult to plan for the future. But the Bank of England have been looking into their crystal ball and giving manufacturers a hand, by warning that inflation will continue to rise, peaking at just below 3% by the end of the year.

They also speculated that the rest of this year would be ‘a more challenging time for British households’ thanks to the rising inflation and real wages falling. And that usually means a consumer spending squeeze.

However, we’re optimists at Ashcroft Trading. Over our years in business we’ve seen (and survived) all kinds of markets, thanks to our thorough knowledge and excellent contacts. So we’re taking comfort from the words of Suren Thiru, Head  of economics at the British Chambers of Commerce, who recently stated that, despite the current period of upwards inflation, he believes it’s transitory in nature.

“There’s little evidence that higher price growth is becoming entrenched in higher pay growth,” he says. “This should give the Bank of England sufficient scope to keep interest rates on hold for some time yet, despite their recent warning.”