By
Godfrey Benjamin
December 21st, 2023
With the growing inflation in the UK, many consumers are already planning a conservative holiday season according to a survey from McKinsey & Company.
Inflation is burning hot in the United Kingdom (UK) as the latest data from the Office for National Statistics (ONS) published the latest inflation data for September. Per the figures published, inflation retested a 40-year high at 10.1%, as the cumulative soaring cost of consumer goods impacted the figures.
The UK government is working hard to curtail the burden of a high cost of living on its citizens and residents even though the global economy is currently antagonizing its plans. The inflation figure recorded for September was slightly higher than the 10% projected by analysts polled by Reuters.
The figures are now a source of concern as industry stakeholders are convinced the monetary policies from the Bank of England (BoE) are not yielding many fruits to help taper down the soaring cost of food and transport. These two segments were sources for concern in September as food prices rose 14.6% year-on-year, transport was up 10.9% compared to last year, while the price of furniture and household goods rose 10.8%.
The underlying turmoil in the economy is also impacting greatly the valuation of the British Pound which further fell to $1.1289, down from $1.1330. In an attempt to ameliorate the latest trigger that sent the market tumbling, Prime Minister Liz Truss fired Kwasi Kwarteng and replaced him with Jeremy Hunt as both made attempts to backpedal on the tax cuts that were introduced on September 23.
The rationale for the tax cuts was to ease the pain for individuals and corporations, however, the market realized the government does not have a viable plan to meet up with the deficit that will be left with the policy.
Hunt’s focus is now multifaceted and according to him, it includes providing support for the most vulnerable residents in the UK alongside “delivering wider economic stability and driving long-term growth that will help everyone.”
UK Inflation May Stir a Dull Christmas
With the growing inflation in the UK, many consumers are already planning a conservative holiday season according to a survey from McKinsey & Company. With the feelings about the prices of groceries tagged “pessimistic,” as many as 84% confirmed they spent the exact prices or more for food items as they did three months ago.
“The level of inflation is already driving consumers to think differently about Christmas with 58% planning to cut back on Christmas spending and 8% not planning to do any shopping at all,” Samantha Phillips, a partner at McKinsey, said in a research note.
The winter is billed to be very cold as the energy crisis, fueled by the ongoing war between Russia and Ukraine has not yet abated. In all of this, there is little evidence that the BoE will change course as it concerns its approach to interest rates.
″[The Bank of England] may be satisfied by the moves made in Westminster for now, but in the coming weeks, we will see what it really makes of the government’s fiscal policy as it makes its next move at its November Monetary Policy Committee meeting,” said Marcus Brookes, chief investment officer at Quilter Investors.