A notable increase in inflation during November has raised concerns ahead of the Christmas season.
- Asda’s income tracker highlights a second consecutive month of price hikes, despite better household finances than last year.
- Consumer Price Index climbed to 2.6% in November, affecting clothing, footwear, and transport costs.
- Forecasters predict inflation will stay above target due to energy prices and wage dynamics.
- Despite inflation, household spending power has seen year-on-year improvement.
The recent spike in inflation, as reported for November, is generating concern as the Christmas period approaches. Based on Asda’s income tracker, the month experienced a notable rise in inflation rates for the second consecutive time. Although households are in a better financial position than they were the previous year, this increase is expected to impact holiday spending.
The Consumer Price Index (CPI) in the UK rose to 2.6% in November from 1.7% in September and 2.3% in October. This escalation was largely driven by increased prices in the clothing and footwear sectors, alongside the transport sector. Such a rise suggests that while the economy is making strides, the cost of essential items continues to climb, posing a burden on consumer finances.
CEBR, which formulates the income tracker for the grocery giant, forecasts that inflation will remain above the 2.0% target in the near future. The primary drivers are expected to be rising energy prices and wage growth, which contribute to heightened essential living costs. This projection raises flags for economic stability and consumer purchasing power during an already stretched financial period for many.
Despite these inflationary pressures, it’s reported that household spending power has been on an upward trajectory year-on-year. According to Sam Miley, managing economist at CEBR, ‘The Income Tracker saw a slowdown in growth in November, driven by accelerating inflation. That said, spending power has continued to increase, with the Tracker having exhibited double-digit growth for six consecutive months.’ This improvement is seen as a positive sign as the festive season nears, though spending patterns remain altered post-pandemic.
Additionally, Asda has reintroduced its 15p festive vegetable sale to counteract some financial strain. From 19 December to 24 December, consumers can purchase certain vegetables at a reduced price both in-store and online. This effort reflects a strategy to alleviate some of the financial burdens faced by consumers, making essential goods more affordable during the holiday period.
The inflation rise in November casts a shadow over Christmas spending, even as household finances show improvement.
