The UK is set to see a significant drop in inflation, with the rate of price increases likely to fall out of double digits for the first time since last summer. This could be an indication that we are entering a period of cost-of-living crisis.
The Office for National Statistics (ONS) has reported that inflation decreased from 1.8% in August 2020 to 0.5% this month, which is its lowest level since December 2016 and well below the Bank of England’s target rate of 2%. The main contributors were decreases in fuel prices and clothing costs as well as airfares falling due to restrictions on international travel amid the Covid-19 pandemic measures.
This news will come as welcome relief for many households who have been struggling financially during these difficult times; however, it does not necessarily mean people can expect lower prices across all goods and services anytime soon due to Brexit uncertainty disrupting supply chains, which may lead businesses having difficulties passing on savings onto customers at the retail level or even raising their costs further down the line if they cannot access cheaper imports anymore.
Overall, while low inflation might seem like good news initially, there are still underlying economic issues that need addressing before any real improvement can be seen by consumers – especially those already feeling the financial strain after months under lockdown restrictions.
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