For those who live on homeowners, their mortgage interest is about to rise, which must be shocking.
Headlines warning of the threat of hyperinflation and rising borrowing costs look a bit silly July inflation rate fell more than expected, Relax to the Bank of England’s 2% target.
After rising to 2.5% in June, many speculations asked whether the UK is heading towards a long-term price spiral, which will force Threadneedle Street officials to conduct a fundamental review.
Although inflation is expected to rise further this year, the fall in July means that the central bank’s pressure to stabilize the economy with higher borrowing costs has temporarily eased.
Anyone who buys clothes on the street likes to cut prices. Even the car driver had a nice day. Although the price of gasoline is still high, about £1.32, the price has stabilized in recent months and even dragged down the inflation rate in July.
Really experiencing inflation means buying a used car. Prices have risen by an average of 14.5% over last year, and have further increased on the basis of the sharp rise in 2020.
Last year, during the first Covid lockdown, car production almost ceased, and the number of relatively new used cars sent to dealers’ front yards dropped significantly.
This year, due to the disruption of the global supply chain and rising demand, the supply of important computer chips has dried up, and automobile production has slowed again. Since the supply of cars is small, this is a seller’s market, and prices have risen accordingly.
Most urban economists disagree with the decline in inflation, saying it may be a short-lived in the process of recovering to 4% later this year or early 2022. They may be right.
But as the Bank of England Its latest outlook on the economyOnce computer chip production returns to pre-pandemic levels and cars roll off the production line at the usual speed, it will be difficult to see how price increases will continue.
In the United States, after the annual price growth rate jumped to 5.4% in June and remained at this level in July, the inflation debate may continue.
However, the temporary pressure in the United States is the same as that in the United Kingdom, but has been magnified many times.In a helpful Comparison of National Bureau of Statistics, We can see that the price of used cars in the United States increased by about 10% last year, the same rate as last year in the United Kingdom, but they only started to take off this year and rose by 45.2% in the year ending in June 2021.
In July, the frenzy of second-hand car purchases in the United States eased slightly—but only because drivers turned their attention to brand new models from the factory, which pushed up these prices.
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Savings data show that there were approximately £250 billion in British bank deposits in the past 18 months.The same phenomenon can be seen in other regions Europe And the United States.
If consumers regain their confidence that not only their jobs are safe, but their house prices are also protected, and that wage increases next year are feasible, then they may start spending before the global supply chain is restored.
When developed countries, including the United Kingdom, seem very reluctant to share their Covid-19 vaccine stocks with developing countries that manufacture most of the products they consume, it may take some time for the global supply chain to recover.
African countries such as Zambia are exporters of cobalt and other metals used in various manufacturing processes, which have fallen into recession mainly due to the outbreak of the coronavirus and have difficulty meeting demand.
In this way, the annual price increase we will suffer next year may be partly our own fault.
