Inflation has reached 9.4%, a record high since 1982. We’re seeing an increase in petrol and food prices which is driving the cost of living up.
The number of people going out again has increased during the past 6-8 months, which means social spending has increased exponentially.
Inflation is the rate of how high prices are going up by, and when there’s an increase in people’s spending habits, it drives inflation up.
But it’s not all doom and gloom. Yes, we may have a tough time ahead, but things are predicted to get better as we move into 2023 . Plus, if you have savings in the bank, it’s good news for you. You’ll start seeing better returns, after years of seeing very little for your money.
What’s driving the cost of living up?
Prices have risen rapidly in the UK over the last year, as you’ve no doubt noticed when doing the weekly shop. Here’s why it’s happening:
Covid – As restrictions eased and life went back to some sort of normality, we naturally started spending more money as we began socialising again. However, many businesses struggled to deal with this increased demand for products: the demand quickly outweighed the supply. These supply and demand issues contribute to driving inflation up.
War in Ukraine – We have limited supply of Russian gas and oil, which is increasing energy prices. The war has also affected food prices, especially vegetable oil, cereal and meat, as we’re now cut off from the biggest exporters. Certain foods are now harder to grow, which raises costs for competitors and in turn increases prices for consumers.
UK economy – In a nutshell, there are more jobs than there are people to fill them. Employers are increasing salaries to fill the vacancies. However, in order to afford these higher salaries, businesses are charging more for their products and services.
The cost of living will increase
With energy prices set to increase again in October, we’ll be feeling another squeeze on the cost of living before the end of the year.
The Bank of England expect inflation to reach around 11% by the end of the year, before it starts to slow down again in 2023.
However, the good news is (yes, there is good news on the horizon!) the Bank of England predict inflation will go back down to around 2% (the Government’s target) in around two years’ time, so until then, here’s our top 10 tips for saving money.
Fix your mortgage
If you’re looking for certainty when it comes to your finances, you can fix your mortgage now. This can offer you stability and security during uncertain times, as well as protecting you from any further interest rate rises.
By fixing your mortgage, your repayments will stay the same until it’s time to remortgage again.
Speak to our expert mortgage advisers about remortgaging today.