Inflation is on the rise in the UK, creating a noticeable strain on households across the country.
This economic challenge is not just a series of numbers and percentages; it translates directly into higher prices and reduced purchasing power for everyday consumers.
As inflation accelerates, it’s crucial to understand the underlying causes and implications for the average person.
Increase in inflation
Inflation in the UK has surged significantly over the past year.
According to the Office for National Statistics (ONS, the Consumer Prices Index (CPI) rose by 10.1% in the 12 months to March 2024, marking one of the highest inflation rates in recent history. Several factors are contributing to this inflationary spike.
One major factor is the increase in energy prices. The war in Ukraine has disrupted global energy supplies, leading to higher costs for gas and electricity.
Additionally, supply chain disruptions caused by the COVID-19 pandemic continue to impact the availability and cost of goods.
Rise in prices
With inflation on the rise, prices of everyday items are increasing across the board. Grocery prices, for example, have seen a sharp uptick.
Data from Kantar shows that food price inflation reached 15.4% in the first quarter of 2024.
This means that staple items such as bread, milk, and eggs cost significantly more than they did a year ago.
Fuel prices have also soared, with the average price of petrol reaching £1.67 per liter, a 25% increase from last year.
Housing costs are not spared either; rental prices have climbed by an average of 8% across the UK, putting additional pressure on household budgets.
Decrease in purchasing power
As prices rise, consumers' purchasing power declines. This phenomenon means that the same amount of money now buys less than it did before.
For instance, if a family used to spend £100 a week on groceries, they might now need to spend £115 to purchase the same items.
This erosion of purchasing power is not limited to groceries. The cost of services, from haircuts to car repairs, has also increased, further straining household finances.
The decrease in purchasing power has broader economic implications. With higher prices, consumers tend to cut back on discretionary spending, which can slow economic growth.
This is evident in the retail sector, where sales volumes have declined despite the higher spending levels.
The ONS reports that retail sales volumes fell by 3.2% in March 2024 compared to the previous year, highlighting the impact of reduced purchasing power.
People wanting to save
In response to rising prices and decreasing purchasing power, many people are actively seeking ways to save money.
This trend is reflected in the increased use of discount codes and vouchers. Websites like Bravovoucher.co.uk have seen a surge in traffic as consumers look for ways to mitigate the impact of inflation on their budgets.
These platforms offer a variety of discount codes for popular retailers, helping shoppers to stretch their pounds further.
Moreover, there is a noticeable shift towards bulk buying and value brands.
A NielsenIQ survey found that 54% of UK consumers are now purchasing larger quantities of non-perishable goods to take advantage of bulk discounts.
Additionally, there is a growing preference for store brands over more expensive name brands, as shoppers look for cost-effective alternatives without compromising on quality.
The rising inflation and consequent decrease in purchasing power are reshaping the economic landscape in the UK.
With prices continuing to climb, consumers are feeling the pinch in their everyday expenses.
Understanding the factors driving this inflation and finding effective ways to save money is essential for navigating these challenging times.
According to a recent study led by BravoVoucher, consumers in the UK have achieved significant savings for food and restaurant retailers through the use of discount codes and promotional offers. Overall, the total savings for British consumers exceed €200,000 in 2023.
The study revealed that those who took advantage of the offers relating to food shops saved on average €30. In regards to offers linked to restaurants, the savings per consumer was on average €10.
As the economic situation evolves, staying informed and proactive will be key to maintaining financial stability.