Inflation is an important area to get a grasp of for business owners likely to be affected by fluctuations in financial markets. Read our posts for more on inflation.
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Recession has returned to the UK after the economy shrunk by 0.2 percent in the first three months of 2012.
Inflation fell in November partly due to supermarket price wars and a strong harvest, keeping food and petrol prices in check.
New figures released today by the British Retail Consortium (MRC) have seen the poorest sales performance since May and 1.6 percent lower than the same month last year.
Household spending has slumped to a new two year low. The fragility of consumer spending, even before the full of effects of public spending cuts have been felt, means an imminent rise in interest rates is unlikely.
Base rates are expected to remain at 0.5 percent amidst predictions that people’s spending capacity will fall for the fourth year in a year; the first time to happen since the 1870’s.
Inflation could rise to as much as 4.2 percent, as the VAT increase takes effect, City economists have warned. Consumer price inflation reached 3.7 percent in December. The rate of VAT increased from 17.5 percent to 20 percent on January 3 2011.
For the first time in five months, retail inflation slowed down but sharp prices hikes are expected after the new year.
Inflation has been pushed up to a four month high due to higher petrol prices.