Is the retail price index fall a help or hindrance?
As we covered in one of our earlier posts, the Retail Price Index (RPI) is still in negative territory and as a consequence we will see Rail season-ticket prices fall across the UK from January 2010. While a negative RPI, which effectively means that prices are falling, is still a good thing for UK consumers it can and will cause havoc in the business arena.
In general terms it is very rare to see costs reduced in such a structured manner, and the rail network is not the only pricing structure linked to the RPI, especially when further investment may be required in an industry. As we saw with the National Express debacle, with the company forced to hand back one of its two rail franchises, pricing pressure and cost pressure is squeezing franchisees from every direction.
While on one hand direct spending by consumers will be reduced in many areas of the economy, because of a negative RPI, any shortfall and any funding requirements in for example the rail network will ultimately mean taxpayers forced to support potentially ailing business franchises. Even though many people believe that inflation is a real danger to the business environment, there is no doubt that controlled positive inflation is the "perfect scenario".
Share this..
Related stories
Gordon Brown shocked as recession continues
Today's GDP (Gross Domestic Product) figures for the UK issued a shock to Gordon Brown with confirmation that the UK economy fell by 0.4% in the third quarter against analysts hopes of a rise of 0.2%. A growing number of economists were certain that the UK was pulling out of the recession and would finally wave goodbye to the bad times and return to the growth path. So what does this mean for the...
Read MoreGovernment announces public sector pay freeze
The UK government will tomorrow set out plans for a public sector pay freeze for those in the high earners bracket of the UK public sector. The move will not affect various three-year pay plans already agreed with nurses and other public sector workers, but will ultimately attempt to grab the limelight from an expected pay freeze announcement from the Conservative party this week.
W...
Treasury remains upbeat despite GDP figures
The UK Treasury Department has remained fairly beat, citing expectations that the UK economy will rebound in the second half of 2009, despite greatly disappointing GDP figures this week. The fall of 0.8% in the economy in the second quarter of 2009 was significantly greater than the 0.3% forecast by many analysts although the Treasury had actually forecast a reduction of around 1%. Why this reduct...
Read MoreHas the consumer been as much to blame for the current recession?
The news in the UK has been downbeat for some time to say the least, we have seen house prices collapse, the debt mountain growing, mortgages defaults on the increase and now we are seeing unemployment numbers show some serious upwards momentum. While we all blame the authorities and the financial sector, could the UK consumer have avoided this trap?
While there have been excesses...
Insurer’s urge Consumers to hide Christmas Gifts
The Association of British Insurers (ABI) has urged Christmas shoppers to hide gifts in the run up to the festive period. This comes after insurance claims last December reached £35m, with 23,000 burglaries reported in relation to stolen Christmas gifts. The most common targets have included parked cars with gifts left inside as well as homes where gifts are left on show or unattended, while...
Read More