Independent Financial Life Planners Bishop's Stortford: Is negative inflation a good thing?

Tuesday, 26 May 2015

Is negative inflation a good thing?

Does a decline of 0.1% in CPI really count as deflation? The last time that the UK had negative inflation, according to the Consumer Prices Index (CPI) was in March 1960. At first sight, it can seem like good news; essentials like petrol, food and transport are cheaper than they were a year ago but for those who produce the oil, or the farmers who make the milk, it’s really not good news at all.

A decline of 0.1% looks like more of a case of "negative inflation", not deflation. The only difference being that economists define negative inflation as something short-term, while deflation is longer-term. And as, Mark Carney, said the UK economy was likely to go into negative inflation "briefly." "A temporary period of falling prices should not be mistaken for a damaging spiral of deflation."

So is negative inflation a good thing? Mark Carney has said negative inflation is "unambiguously good". That is because lower petrol and food prices are good for everyone. Even the farmer gets some benefit, because he too buys food and fuel. If we spend less on filling up our tanks and doing the supermarket shop, we have money to spend on other things. On average, we're each expected to save £140 as a result of lower petrol prices this year. So businesses from fashion stores to fun-fairs should benefit. So for the short-term making things in reality and in perception seem better than they were. Making plans for the future with the election over and the promise of a few extra pounds in the pocket all help the future look a bit brighter. Enable’s IFAs in bishop’s Stortford are here to help you plan for a brighter financial future.

Issued by: Enable Independent Financial Life Planners  25c North Street, Bishops Stortford, Herts CM23 2LD Telephone: 01279 755950 - Fax: 01279 657339  Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority. It is important always to seek independent financial advice before making any decision regarding your finances. If you would like any assistance, please contact us. NOTHING CONTAINED IN THE ARTICLES SHOULD BE CONSIDERED AS GIVING INDIVIDUAL FINANCIAL ADVICE

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IFA Bishop's Stortford

At Enable Independent we know that our clients trust us and rely on our advice to help them to plan a better, more secure financial future. This is a responsibility that we take very seriously especially because we know that many clients have chosen us on the recommendation of friends and family. Each one of our advisers has deep expertise in their area of specialist knowledge and, as a team, we hold some of the highest qualifications available in the financial advice industry.

Our job satisfaction comes from using our skills to find workable, affordable and flexible solutions to meet our clients needs. Whether we are planning for known future funding requirements such as house purchase, school fees or income in retirement - or for the unforeseen such as job loss, long-term illness or early death, our independence from any product provider enables us to view the marketplace impartially. Our training permits us to look beyond a product's marketing hype and select on the basis of its fitness for purpose.