Understanding inflation is an important factor when it comes to your financial success. If you don’t factor it in when deciding where to put your money, you could find your wealth shrinks over the years. Whether that’s savings accounts or investing.
The current causes of higher inflation are largely COVID-related. The easing of lockdowns has boosted consumer confidence and unleashed pent-up demand. At the same time, bottlenecks in production and distribution are squeezing supplies – from building materials to foodstuffs. This supply and demand imbalance has forced up some prices.
The rate of inflation is the change in prices for goods and services over time. On 18 August, the Office for National Statistics reported the Consumer Prices Index measure of inflation saw a surprise slowdown in the year to July, down to the Bank of England’s target of 2% from 2.5% in June.