In recent years, inflation has been a significant concern in the UK. At Lynas Vokes, we understand the importance of staying up to date about economic and financial indicators, especially those that have an impact on our lives, therefore we have put together some key facts about the current inflation trends in the UK and a glimpse of what lies ahead.

The UK's recent inflation journey

The last few years have been more of an inflation rollercoaster ride than anything else. The global pandemic, which was followed by economic disruptions, delivered a dramatic uptick after a few relatively stable years. All this had a direct impact on supply chain matters and escalating energy prices, amongst others. In the UK, there have been numerous factors that contributed to the current inflation pressure.
 

1. Higher business costs: Wages rose following an increase in minimum wage and many businesses have passed these costs on to consumers, leading to an increase in prices for goods and services
2. Supply chain: Geopolitical tension following the global pandemic has created a bottleneck in supply, resulting in higher costs for goods and services
3. Energy: The UK heavily relies on imported energy and therefore is subject to instability in oil and gas prices

Beyond the peak

While the inflation in the UK has withdrawn from its peak, it has only recently hit the Bank of England’s target of 2%. This has a direct impact on individual consumers and various sectors of the economy alike. Several indicators provide an insight into the potential scenarios so let’s have a look at what lies ahead.

Global forces, and forecasts

Naturally, the UK’s recovery pace will play a significant role in establishing the inflation pressure. The UK is influenced by geopolitical changes, economic trends and of course the market’s expectations. The Bank of England's predictions suggest a steady return to the target figure sooner than we can anticipate.

What to do next?

If you are an investor or saver, it is crucial to better understand the inflationary environment and pay attention to these suggested strategies.
 

1. Investments in property usually perform well during inflationary times
2. As the economic landscape is continuously changing, reassess your investment strategy portfolio regularly
3. Instruments such as index-linked gilts are likely to provide a barrier between you and inflation effects
4. Maintain a diverse portfolio to soften the impacts of inflation across different asset classes

In this ever-changing economic landscape, staying informed and up to date is a key factor. Inflation will forever present challenges, however it can also create opportunities. We are committed to guiding our clients through these unpredictable shifts, ensuring goals remain on track no matter what lies ahead. If you have any questions or concerns, get in touch.