Christmas 2022 is bound to be a challenging time for some people. The UK is currently at its highest inflation rate since October 1981, which has caused significant knock-on effects on the economy. There is also a chance it could increase over the winter, despite the Bank of England’s best efforts to reduce it.
This inflation spike, combined with the energy crisis, will mean that costs will be extremely high compared to other winters, and many people will be looking to cut back and get the most out of their money.
What is inflation?
Inflation is a term to describe an increase in prices, which means that everything will become more expensive. Your wages may not necessarily increase, which means in turn a decrease in purchasing power – quite simply, you can’t buy as many things with the same amount of money. For context, £1 in 1952 is the equivalent of £34.01 in 2022.
Inflation happens for a variety of complex reasons, but overall, it is usually increasing at various different rates. A controlled rate of inflation is actually very healthy for an economy, but inflation that is too high is dangerous. Hyperinflation is the term and example for when inflation soars to uncontrollable levels, often due to war or social collapse, and can be devasting to an economy.
Why is inflation high in the UK currently?
Many factors contribute to inflation. Institutions and experts will often not agree on the root causes. It’s been generally agreed that the current spike in inflation in the UK is down to the after-effects of Brexit, the energy crisis, and the falling value of the pound compared with the dollar.
How does it affect individuals?
Inflation affects everyone, as the price of everything will increase. This will be from shopping to mortgages to fuel prices. As with a lot of economic downturns, those in the lowest category of earners are unfortunately often hit the hardest, and with Christmas being an expensive time of the year, this can be very challenging.
In an attempt to slow inflation, the Bank of England raised their interest rates to 3% in October to combat the current 11.1% inflation rate. Raising interest rates means that it will become more expensive to borrow money and more expensive to be in credit, so spending will decrease as people look to save more money. This will lower inflation but in the short term may cause a greater financial loss for some, such as those in debt or with a mortgage without a fixed rate. So while inflation may reduce in 2023, for the most financially challenged, things may get worse before they get better.
Combined with the energy crisis, this Christmas in the UK will undoubtedly be tough for some, so it is important for you to support those around you who might need it and ensure that you save money where you can. We know that you might be feeling the pinch, which is why CurrencyTransfer is ideal if you’re looking to save money on your transfers without compromising on excellent customer service.
Christmas costs in the UK
The average UK household spends an extra £740 on average in December, an increase of 29% compared to other months. Due to inflation, this means that UK households will spend approximately 65% more this Christmas compared to last year due to the increase in costs. This will be everything, from food, presents, decorations, etc.
Christmas is also often a time of travel, with people either going for a festive holiday somewhere or travelling to visit family. Using CurrencyTransfer can be a great way to save money on your transfers, as we can help you find the best deal for your situation.
How CurrencyTransfer can help you save money for what matters
Due to inflation rises, we know that you’ll be looking to save money to spend on family and friends, or even ensure that you are economically stable going into 2023.
If you are a business owner, we know that bank fees can often be excessive, and those broker salesmen can also add unnecessary charges. If you’re not using the most cost-effective transfer service that you can, then you could be losing hundreds of pounds every single month, which in this current economy, most people cannot afford to do. Even if you are not a business owner, any amount of money that needs to be sent abroad can incur some big charges, many of which aren’t required.
If you are looking to make large overseas transfers, there is almost certainly some money to be saved, especially if you are using a bank. If you need to make repeat transfers, then this is even more worthwhile, as the amount you will save will increase over time. We understand that the cost of living is high at the moment, and our business is all about helping you save as much money as possible.
Once you open an account, we will allocate you a Personal Currency Concierge to help you with your unique needs, so you can focus on the important things this festive season.
Caleb is a writer specialising in financial copy. He has a background in copywriting, banking, digital wallets, and SEO – and enjoys writing in his spare time too, as well as language learning, chess and investing.