Student News

UK Inflation rate falls.. a bit

The UK’s Consumer Price Index annual rate of inflation has dropped from 4.4% in February 2011 to 4%, bringing us back to where we were in January but still a 4% increase since this time last year.

How could this drop in inflation affect you as a student?

What is inflation?

Inflation is how we measure changes in price and we see this by looking at two areas:

  • The cost of mortgages, council tax and interest payments.
  • Cost of a night out; glass of wine, food, going to the cinema.

A rise in inflation means a rise in interest rates which means an increase in prices. This is good for anyone with savings but bad for homeowners, this surprise fall in inflation should mean that the Bank of England won’t raise interest rates again and the cost of living should ease.

How does inflation affect students?

Over the last year the cost of living has crept up so much it seems impossible to buy lunch, let alone splash out on a night out. You get in from the library at the end of the day and wonder what you could possibly have spent £5 on when you only bought a coffee and a sandwich. Money just doesn’t go far enough anymore, and peering into a forever empty wallet is soul destroying.

Because it’s not only students that can’t go out or buy clothes and music anymore, but everyone else as well, this has forced retailers to use promotional offers and discounts at a record high of 40% simply to get people to buy the products.

Fruit prices fell by 4.7%, and bread and cereals by 2.6% compared to March last year.

Although the rate has dropped, it is still double the Bank of England’s target and is expected to rise up to 5% by the end of the year, before lowering to 2% by the end of next year.

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