It will bite, many people will definitely be worse off by varying degrees in the coming months, however the coverage in the media absolutely strikes me as close on hysteric. As usual it concentrates on the now, not the bigger picture inclusive of what was and what will be.
Prices are supposed to go up, that’s how economics works. However, prices have in effect been falling on most goods and services in the UK for over ten years. That cannot go on forever. The maths doesn’t work.
Broad inflation is high today for a number of reasons, however a key one is simply one of timing. In the middle of a global pandemic, many things were a lot cheaper than they should normally be, hence when prices were then measured to the previous 12 monthly point, there is no inflation. We’re now measuring back 12 months to the middle of the pandemic, prices are absolutely going to be higher for many goods and services right now than they were 12 months ago. That’s just plain logic. And once again, maths.
Personally, I believe inflation at this level will be relatively short lived. I could be very wrong of course. However, I go by what I see. Supply chain bottlenecks caused by the knock on effects of the pandemic around the world defo pushed prices up in the back half of last year. I could see this at ground level in the weekly supermarket shop. For just about ten years before then, the weekly bill has barely changed, I supect many of you have seen the same.
I reckon this went up by a good 20% for a few weeks and months. Then 2 weeks ago, all of a sudden, there are barely any missing items on the shelves, bogofs and discounts are back and low and behold the last couple of weeks, the shopping bills are now back close to what they were 6 months ago.
Factories and supply chains are getting back to normal around much of the world. People can no longer rely on direct financial support offered by their Government during the pandemic. They will return to the workplace. Offical inflation will remain a bit higher through the next 12 months while some things work their way through the system, e.g. the price of gas, oil and holidays but the signs of a pushback are there imo.
I also had a look at current gas prices vs. futures and compared the market on energy bills. Interesting that right now the variable rates are much lower than the fixed rates. Seems like a number of providers bought at the peak…