Although CPI has been increasing, some people are unsure about what will happen next. The rate of inflation soaring could be bad news for savers, but deflation could also have a negative impact.
Tim Bennet, Head of Education at Killik & Co, recently spoke about inflation and deflation, during a Kilik Explains episode on YouTube: “Now deflation you might think superficially, if you’re about to save money, is a great idea – but it isn’t. It does mean that prices fall, not just for single items but across the economy as a whole.
“It’s bad news because if consumers start to anticipate falling prices, they may stop spending, expecting to be able to buy things cheaper say a year from now.
“Deflation across the economy suggests that people should be negotiating wage cuts, not wage increases … psychologically if nothing else, that’s not something we’re used to.”