Household budgets under additional pressure this Christmas
UK household budgets experienced another hit today as inflation unexpectedly hit its highest point in six years. Today, news from the Office of National Statistics revealed that inflation hit 3.1% in November, up 0.1 of a percent from 3.0% in October. No doubt this will put a squeeze on living costs at the other end of the spectrum to borrowing for the average consumer and/or homeowner with a mortgage.
The rise in inflation was reported to be due to video games, fuel, food, coffee and electricity all becoming more expensive due to an increase in oil prices and a post Brexit-referendum weaker pound (effectively causing imported goods to increase in cost). British butter, a staple that suffered an increase in cost of production since the Brexit referendum appears now to be passed onto the British public with a 23.3% increase in price.
Despite the ONS report however, some City analysts believe inflation will fall next year, and another interest rate rise by the Bank of England somewhere in the summer of the coming year. Though with wage increases remaining still, it puts the average British consumer in a difficult position.
With just over a week of Christmas shopping remaining, this news is another hit to the pockets of consumers who just last month were informed that the Bank of England would increase interest rates from 0.25% to 0.5%, impacting all borrowing of the average homeowner from mortgages, personal loans and credit cards.
Just as this news broke today one has to wonder how the high-street, and consequently the economy and jobs will respond, especially since wage growth has been stagnant for a while. The recent news of the Brexit Divorce Bill finding mutual agreement (in principle) between the British government and the European Union across the channel my have been a glimmer of good news for the future homeowners, but they will still have to be on guard from too much debt.