Inflation hits 2-year high as Christmas nears
Christmas this year really is going to be more expensive. Figures released today show that inflation jumped up to 1.2% in November. It was 0.9% in October. Experts had expected a rise of 1.1% making the news even worse.
Some of the highest price increases come from clothing, fuel, technology and some recreational and cultural expenses. The ‘core consumer prices index’ (CPI) rate has also risen to 1.4%. The CPI rate doesn’t include more volatile goods such as energy and fuel.
Brexit now hitting households
Although warnings of price rises and an economical downturn have been coming, today’s inflation news show that households are already being hit. The Guardian features comments from Hannah Maundrell at money.co.uk, a finance comparison website who says that this is a “wake-up call” and that prices will keep on rising.
Household finances have been protected against the backlash of Brexit so far but today’s higher than expected figures show it’s finally starting to bite. This is the start of things to come and next year we’ll be battling rising prices head on. This will get worse mid-way through the year as retailer’s forward pricing starts to run out and we have to foot the bill for the real cost of purchases.
Hannah Mundrell, money.co.uk
With Christmas around the corner, it’s not looking great. It also makes it harder for the government and Brexiteers to keep pushing the line that Britain’s economy is proving resilient. It may have been… But for how much longer?
You can see the full inflation report at the Office for National Statistics.
Many voters not willing to take a money hit over Brexit
Whilst millionaire Brexiteers including Arron Banks may be well able to afford a hit on their finances for Brexit, many others won’t be. And a recent poll conducted by YouGov for Open Britain found that 49% of ‘Leave’ voters polled were not willing to lose any money because of Brexit. It also found that only 1 in 10 were willing to be more than £100 a month worse off.
The poll also showed that only 11% of ‘Leave’ voters believed their personal finances would be hit by Brexit. They may not have believed the economy warnings before but today’s inflation news show that prices are already higher. The warnings will not so easily be ignored.
You can read more about the survey at Open Britain.
A choice between the economy and immigration
The news provides more support to calls for a ‘soft’ Brexit where Britain maintains close ties to the EU by staying inside the single market and customs union. Of course, to do that, Britain would need to allow freedom of movement of people with the EU. Something that goes against Theresa May’s ‘red line’ of immigration control.
Research last week revealed that a cut in immigration would also compound economic growth. The government will soon have to make a decision about whether immigration control is worth the damage to the economy. The YouGov poll shows that for many people, the economy is more important.
Ed Miliband told the Observer that the UK should stay in the single market and customs union even if it limits cuts to immigration. He added that the government would see a backlash from ‘Leave’ voters if Brexit leaves them poorer.
Government will rightly be subject to an almighty backlash from Leave voters, if it makes decisions that make them far poorer and leaves less money for public services,”
The reality is that there are very difficult trade-offs and risks that lie ahead, which the government has completely failed to acknowledge. It must now make choices to minimise those risks.”