The UK economy is characterised by complex, interconnected relationships that ultimately weigh heavily on the cost and availability of consumer goods and credit products. As one segment of the economy moves in a particular direction, other aspects are impacted, resulting in a continually changing landscape, which can be hard to navigate. Add-in a number of unanswered Brexit questions, and sorting out the health and vitality of the UK economy is an even greater challenge.
British consumers have faced ups and downs for months – some directly related to Brexit circumstances, and others resulting from general economic conditions. A mixed set of indicators point to higher shop prices and slowed house price growth – even as news of water bill price reductions and cheaper car insurance offer a small measure of consumer spending relief.
Shop Prices On The Up
The British Retail Consortium reported in early April that shop prices recently experienced the biggest rise seen in six years. According to data shared by the organisation, shop prices showed an annual rise of .9 per cent in March, compared to a .7 per cent rise in February, representing the highest inflation rate seen since March, 2013. It is thought much of the rise can be accounted for by the increased cost of non-perishable food items.
Food prices showed brisk price upticks of 2.5 per cent on the year, compared to 1.6 per cent the prior month. The rise was particularly notable in non-perishable categories, wherein the rise was 3.6 per cent, in dramatic contrast to the uptick of 1.5 per cent experienced the month before.
While some of the food price increases can be attributed to Brexit concerns, global rises in grain prices and poor production results for onions, potatoes, and cabbages, may also share the blame for rising food shop costs. It is believed more uncertainty swirling around the Brexit transition, will likely keep prices moving upward and may affect product availability in stores.
House Price Growth Slowed
According to an early April Halifax report, house price growth slowed during the first few months of 2019, in annual terms. It is thought already high property prices and Brexit uncertainty are at play impacting the slowdown.
The housing market is not strong in London, responding to the potential economic turmoil in store for the UK, should a smooth Brexit deal remain elusive. The Halifax report points to the fact house prices were rising at an annual rate of nearly 10 per cent, shortly before the Brexit referendum, and that March house prices, viewed in monthly terms, fell by more than 1.5 per cent this March.
Though Halifax figures are sometimes considered more volatile than projections made available by some other reporting sources, the data provides clues about the future of property markets, should uncertainty prevail surrounding Brexit. Meanwhile, working Britons still have flexible borrowing options, turning to banks and alternative online lenders for access to short-term loans and other financial products.
Water Bill Deals Ahead
Britain’s water industry regulator recently agreed with three of the country’s major utilities, striking deals for lower water bills in coming years. The arrangements, outlining 5-year water bill reductions, include cuts of 4.7 per cent by Severn Trent and 11 per cent by United Utilities, during the same period. The agreements reached also call for utilities to ramp up efforts against pollution and tighten leakage by at least 15 per cent by 2025.
Unless you’re a trained analyst and keen economic observer, working out the future of the UK economy presents challenges. Even with up to date information about trends and conditions, the complex, interconnected nature of global economic matters can leave you guessing about the future. Brexit concerns only add to the present uncertainty, particularly in light of recent news, highlighting financial inconsistencies facing consumers.