UK inflation has fallen to its lowest level in a long while – and we have food prices to thank.
After a solid year and a half of high prices, August brought some reprieve. But, while it might have been a long time coming, it wasn’t exactly expected.
Here’s what you need to know:
- UK inflation: the facts and figures.
- Why is inflation falling?
- What does the future of inflation look like?
- Protecting your brand from economic uncertainty.
UK inflation: the facts and figures
Inflation fell in the year to August, from 6.8% in July to 6.7%. Admittedly not a drastic drop, but still a much-needed sign of the turning tide.
For one thing, this is the third month in a row that inflation has fallen, according to the Consumer Price Index. It’s also the lowest inflation has been since early 2022, suggesting something like a return to normal after extended economic turmoil for many.
There is, of course, still a long way to go – especially when you consider that the Bank of England’s target for inflation is 2%.
Still, there are already signs that this having a calming effect on the economy as a whole. Within 24 hours, it was announced that the Bank would be holding interest rates steady at 5.2%. This effectively ends a run of 14 consecutive interest rate hikes, implemented in an attempt to calm inflation.
Why is inflation falling?
Investors had actually predicted an increase in inflation, due to rising fuel costs. It was, then, the slowdown in rising food and drinks prices that helped to drive down inflation as a whole.
Food and drinks are the biggest contributors to inflation in the UK by a significant margin, according to the Office for National Statistics. And, in this instance, it was milk, cheese, and vegetable prices that slowed the most.
Additional factors, including falling air fares and accommodation costs, also contributed to the recent fall in inflation.
What does the future of inflation look like?
While positive, we’re not out of the woods yet. After all, food and drinks prices in August were still 13.6% higher than 12 months previous.
However, there are definitely signs that ‘the plan to deal with inflation is working’.
According to Chancellor Jeremy Hunt:
‘[Inflation] is still too high, which is why it is all the more important to stick to our plan to halve it so we can ease the pressure on families and businesses.’
If this plan can be made a reality, it would be great news both for businesses and consumers who have been stretched by the cost of living crisis.
Protecting your brand from economic uncertainty
Whether protecting your brand from rapidly rising costs or making the most of easing financial pressures, it’s people who will ensure your organisation’s short and long-term success.
Invest in your teams to make them as strong, skilled and reactive as possible.
At The Advocate Group, we’re trusted by some of the biggest names and most exciting SMEs in the consumer product sector. So, why not get in touch to see what we can do for you?
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