Recently, the rate of inflation has increased at a dramatically higher rate in previous years. As inflation rises, consumers will inevitably pay the price through the rising cost of consumer goods such as food, white goods or even the price of a glass of wine. In this article, Acumen has investigated the potential impact of inflation on our finances and suggests strategies that can soften the blow.
What is inflation?
If you have ever wondered ‘what is inflation? it is the rate at which the price of goods and services increases. Inflation is expressed as a percentage and looks at how much more expensive things are compared with the previous year. For example, if the inflation rate is 2%, you will expect to pay £102 for something that cost £100 a year ago.
Effects of inflation
With the rate of inflation at its highest level for more than two years now, it is having a financial impact on the country. Inflation can have numerous effects and as it rises, consumers are faced with increasing costs. With the UK economy being heavily dependent on imports, this is funnelling down into prices for a range of consumer goods.
- Petrol – As the pound sinks, the price of petrol is soaring. In fact, the price of petrol is at its highest level in the UK for almost two years.
- Holidays – The price of foreign holidays is going up and, with the pound weaker than ever, after falling more than 20% against the euro and dollar, it means Britons are getting less for their money when they are abroad.
- Supermarkets – The rising cost of imported goods is feeding down into the prices paid by consumers for their everyday groceries and goods.
In addition, with the latest levels of inflation increasing to catch up with the recent growth in wages in the UK, it will mean that disposable income and consumer spending levels will be significantly reduced.
Coping with the effects of inflation
We understand that as the cost of living increases you will want to reduce the effects of inflation wherever possible. Here, we have gathered some tips that you should consider.
Investments – You are going to need to increase the amount of money you earn from investments. Taxation policies can be confusing around investments. Here at Acumen, we will help to reduce the taxation on your investments through a range of possible methods.
Financial Planning – Planning your finances is a key to staying on top of inflation and ensuring you aren’t adversely affected by the increasing rates. At Acumen, our highly-qualified team of experts can analyse your current financial situation and present you with a tailor made financial plan.
Buy Property – Properties are usually able to retain their pricing power through inflation. As the rate of inflation increases, the prices in house will typically increase in conjunction. However, in real terms, houses are valued to be cheaper. If you want to consider buying a house and need a mortgage, here at Acumen Financial, we can offer you our expert mortgage advice whether you are a first time buyer or home mover.
If you require the advice of an independent financial adviser or require more information on the services available from Acumen Financial, talk to us today on 0151 520 4353 or email email@example.com.