The UK’s inflation rate is currently at 5.4%, and the Bank of England expects it to rise to 6% by April, according to The Guardian.
But what does the rising inflation actually mean?
What is inflation?
According to Investopedia, “inflation is the decline of purchasing power of a given currency over time”. In simple terms, high inflation means that you’re going to get less bang for your buck. If your local food shop suddenly seems more expensive, that’s a result of inflation.
Does inflation impact everyone in the same way?
Food writer Jack Monroe highlighted in a Twitter thread that the indices used to measure inflation often ignore the real cost of inflation for those on minimum wages and zero-hour contracts. The ONS (Office for National Statistics) has since updated how they publish statistics to consider a wider range of household circumstances. Inflation isn’t the same game for everyone, and some people are hit disproportionately by the rise in the cost of goods.
Is there anything I can do about inflation?
How you might deal with inflation depends on your own personal living situation. Low-interest rates on bank accounts mean that interest on your savings are unlikely to be outpacing the current inflation rate (that’s right, your savings might actually be losing money!)
As everything is more expensive in periods of inflation, you might want to consider putting off larger purchases until their cost comes back down. Fortune suggests that cars are one of the worst purchases you can make when inflation rates are high – inflation rises on vehicles disproportionately. It’s also might be worth revisiting your budget, as higher living costs might be eating away at more money than you've realised.
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