Bank of England warns of inflation and the cost of your Christmas dinner is set to rise!


Inflation is at an all-time high; The Office for National Statistics have reported that rates have increased from 3.1% to 4.2% in the 12 months to October and are at the highest levels since November 2011.

Inflation accounts for the price of all goods and services and a fast increase is likely to lower many people’s standards of living. This means that while the economy rebalances things are going to cost a little more this Christmas. The average home cooked Christmas dinner for 4 is now expected to come to £27.48, a 3.2% growth since October of this year.

This sudden surge in inflation was essentially caused by the general lack of consumer spending during the Covid-19 pandemic, quickly followed by a rush of demand once everything opened again. Forbes Magazine called it ‘a bottleneck demand’, wherein the economy is simply not equipped to handle the influx of consumer pressure.

Furthermore, the nation saw remarkably low prices during 2020 and the 12-month spike in inflation is now accounting for these figures. Economists are suggesting that this is a temporary measure and figures will return to normal within a year.

The Bank of England’s current target for inflation is 2%, this means that The UK is sitting at over double where it should be. Banks are likely to raise interest rates in an attempt to stabilise the economy. Although the Bank of England’s most recent vote concluded that they would remain on hold for the time being, increases can be expected by December.

These rapid rises of inflation have been seen globally. The USA have newly recorded an annual inflation rate of 6.2% and similar trends can be seen amongst many European nations. However, the European Central Bank and the U.S Federal Reserve have reassured their respective nations that they are not considering raising interest rates.

Frances O’Grady, General secretary of the Umbrella Union Congress claims that ‘With prices rising faster than pay, many families will struggle to keep up with basic living costs, let alone Christmas celebrations.’