‘Shock uptick’ revealed in latest inflation figures: Business community reacts

To the surprise of many, the consumer price index (CPI) measure of inflation stood at 4 per cent in December, according to the latest official figures from the Office for National Statistics (ONS).

Following this development, many notable figures from the business community have lent their voice to the discussion regarding the ramifications, both short and long-term. Read on to find out more…

Nicholas Hyett, Investment Analyst, Wealth Club

“A surprise jump in inflation is not good news. Policy makers, mortgage holders, investors and the average shopper had all been hoping price rises continued to slow over Christmas, clearing the way for lower interest rates and easing the cost of living crisis.

“Christmas was particularly expensive for those indulging over the festive break, with alcohol and tobacco the driving forces behind the uptick in inflation, although food and non-alcoholic drinks continued to see inflation slow.

“But, while the rise in headline inflation will attract the attention, longer term it’s the stubbornly high core inflation that is a greater concern. Still running at over 5.1 per cent, until this comes down the UK will be very vulnerable to global economic shocks that cause spikes in food and energy prices, and we’ve seen all too many of them recently.”

Founder and CEO of My Community Finance, Tobias Gruber:

“The Bank of England seems to be losing the battle against inflation, and these shocking figures mean Andrew Bailey may need to contemplate yet another base rate hike, spelling further misery for borrowers.

“The strategy of increasing interest rates, aimed at curbing spending, paradoxically translates to added hardship for millions grappling with the prospect of shelling out hundreds of pounds extra each month on their mortgages.

“It’s a perplexing scenario for borrowers who struggle to comprehend why diligent homeowners are forced to shoulder the burden of getting inflation under control, while the banks continue to reap the benefits.

“This raises fundamental questions about the fairness of the current economic approach and whether it genuinely serves the interests of hardworking people.”

Founder of comparison site Quotegoat.com, Michael Foote:

“Persistently high inflation, coupled with a recent surge in energy costs and elevated mortgage rates, is intensifying the financial burden on millions of households. For many, the cost of living is a very real and immediate crisis.

“Families need to carefully scrutinise their expenses and incomes, planning for the entire year and beyond into 2025. Although the government has help in place for the most vulnerable, those on the edge of financial stability are struggling to cope with the rising costs of essentials such as food, energy, and clothing.

“Many might have to make substantial lifestyle changes to navigate the challenges posed by persistently high inflation.”

Amanda Aumonier, Director of Mortgage Operations at Better.co.uk

“This shock uptick in inflation could in theory prompt the Bank of England to raise interest rates in an effort to regain control. This possibility will raise concerns for anxious homeowners facing the unenviable challenge of securing a new mortgage deal this year, as there’s a fear that mortgage rates could increase.

“1.5 million homeowners have fixed-rate deals concluding this year. If you’re one of them, reach out to a mortgage broker ASAP to help you navigate the best way forward. Being proactive can make managing challenges associated with the shift in your finances more straightforward.”

Josh Graham, Co-Founder and Chief Marketing Officer at Airtime Rewards:

“With inflation remaining stagnant at 4 per cent, challenges are looking to remain for some time. Following a strong month in November for retail sales figures, merchants and consumers may feel frustrated that inflation isn’t moving as quickly as expected.

“This is continuing to squeeze consumers’ finances and eat into their limited disposable income, while putting pressure on British retailers. December’s retail sales only grew by 1.7 per cent from November1, less than the rate of inflation, meaning retailers are having to work even harder to attract and retain their customers.

“Against this backdrop, merchants will need to provide exceptional customer experiences, both online and in-store, to entice customers to part with their cash amid the cost-of-living crisis.”

By Matthew Neville – Senior Correspondent, Bdaily

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