Why inflation may be higher than expected, and how you are best placed to judge

//Why inflation may be higher than expected, and how you are best placed to judge

Why inflation may be higher than expected, and how you are best placed to judge

A rise in inflation for January is hardly going to shock anyone after the recent rise in VAT, but I wouldn’t be surprised if it took a bigger jump than most are expecting.

Many retailers and shop owners are using the 2.5% VAT increase as an excuse to raise prices further. Let me take you through an example of my experiences from one day last week.

I started out by visiting my barber early in the morning he was telling me how his rent had increased from £14,000 last year to £18,000 per annum.  Now that’s an increase of 22%. At this point I was feeling sorry for him until I paid for my haircut and found that he’d had raised his prices from £9.50 to £12.50. That’s a 24% rise!

Later that day the sandwich man arrived, looking forward to a hot soup I handed over my £1.50. He told me that due to VAT and increased costs it was now £1.60 that’s an increase of 6.2%. I then popped next door to get a bottle of water and yes you’ve guessed it, the price had increased, this time from £1 to £1.10 this 10% increase was once again blamed on VAT.

Many of you will have seen your costs increasing from fuel to food and that’s why you are best placed to call a rise in inflation. So while the January figures may shock some we have already seen it coming.

Inflation levels for December 2010 stand at 3.7% for the consumer price index (CPI) and 4.8% for the retail price index (RPI). Many would argue that RPI is the best indicator to follow.

What are your experiences of price rises since the New Year? Where do you think inflation will be by the end of January? Add your comments and experiences below

To understand why inflation is great for property investors sign up to our newsletters.

2017-08-02T13:25:13+00:00 January 24th, 2011|News|