Furniture is one of the consumer goods most impacted by inflation at present.
UK inflation rose by 0.3% points between November and December to put inflation at 5.4% overall, according to the Office for National Statistics (ONS). These are the highest levels seen in in Britain since the early 1990s, and forecasts from the Bank of England now point to 6% inflation by April.
As we reported in our December article, clothes, fuel, and food are all experiencing notable price increases, with oil only yesterday hitting a seven-year high. Things like furniture are also going up in price though, with Ikea raising their prices and citing supply shortages as the root cause.
These supply shortages tie in with increased demand for shipping containers but also reduced staffing capacity; partly due to wages falling in contrast to inflation, but more so because of Covid and employees having to isolate.
OFF LIKE A ROCKET. UK inflation just came in at the hottest in 30 years. Gilts selling off across the curve. 10yr yields now highest since March 2019 pic.twitter.com/yNoVzFRz5w— Dani Burger (@daniburgz) January 19, 2022
Inflation would have to pass 8.06% to surpass 1991's economic environment, but depending how Covid behaves this year and how nations resolve the supply chain issues, such a change isn't so farfetched. Anything higher and we have to go back all the way to 1981/82 for inflation between 8-11%.
While higher inflation is a scary prospect, our current inflation is still painful enough. According to the ONS, November pay increased by 4.2% but the cost of living increased by 4.9%. Chancellor Rishi Sunak told reporters that the government “will continue to listen to people’s concerns as we have done throughout the pandemic”.
The Bank of England raised interest rates in December and will be feeling further pressure to do the same again in February to try and take the edge off what will inevitably be painful for the British public. Bookmakers are currently suggesting that the BoE will increase interest rates to 0.5%, but with Canada announcing its highest Consumer Price Index inflation (4.8%) since 1991 and other countries in similar positions, the bigger picture is that this is a global problem and might not be fixed until everyone acts within a degree of unison.