As of the 18th of May 2015, the British Economy has entered negative deflation for the first time since 1960, making it 55 years of continuous inflation – up to now of course. This is definitely going to affect the commercial sector of the UK, whether it be positive or negative – there are many different aspects that could bring change across pricing, profits and overall revenue in the months to come. Chancellor George Osborne has said that this isn’t “damaging deflation” and insists that the government would be prepared to take on any risks that present themselves, despite this.
The people behind the facts – ONS (Office for National Statistics) aren’t remaining confident of this negative inflation sticking around however. While food and generic shopping costs have fallen (food costs alone falling 3% for the last four months, on annual terms) housing and oil prices have remained resilient and continued to rise. The largest contribution to this drop in inflation comes from the drop in air fares which has been linked to the Easter Holidays by ONS.
It’s been wildly reported that the motor trade industry is in part responsible for this inflation. Motor Traders are people who buy and sell cars and operate in the trade. As a whole, since 2001, the resale value of cars has risen, as has motor trader insurance (source: https://www.onesureinsurance.co.uk/motor-trade-insurance)
In the past, salaries have been shown to rise slower than inflation, but in this case that situation has been reversed, so hopefully this could be a tell-tale sign that the economy is on the mend. Businesses’ changes to elements such as pricing alone can affect how much customers want to buy and the revenue brought in by the business as a whole, so the pending reaction from big players across the whole Commercial sector in the UK will be the telling point of whether the figures continue to improve, or whether we end up in another case of inflation.