Hoarding

When prices increase rapidly, consumers may begin to hoard basic commodities. Many people do this out of fear of further price increases, but there are also speculators who buy the commodities with the hope of selling them at a higher price at a later time. DataEco evaluates this data and shows what markets and organisations will be most affected by this hoarding, allowing you to make decisions based on competitor and market analysis.

Price Increases

Inflation is the increase in the average price of goods and services that is not met with the same percentage increase in income across the country. This can happen over a long period time or be a sudden event that causes short-term catastrophe.

Purchasing Power Decrease

As inflation rates increase and people don’t receive proportional raises in income, they are unable to purchase as many goods and services as they were before. This hurts both the families and the businesses that are produce or provide those goods and services. When consumers can’t purchase with the same power as in the past, the future doesn’t look as good for the companies across every industry in the UK.

Increased Spending

Some people may spend more if they fear increased prices, hoping to get more bang for their buck on the products and services that haven’t yet gone up in price. This ultimately adds to inflation because it increases demand on scarce supply, causing organisation to increase their prices even further to keep up with this new demand.

Decreased Saving

Increased spending means that people are taking money out of their savings in order to purchase the products and services they need before prices being to rise. This leads to an overall decrease in savings rates for both consumers and businesses.

Decreased Bond Values

If inflation rates are higher than the fixed interest rate that a bond is issued at, then the bond holder loses that percent per year on their purchase. Investments that were previously safe have now become disastrous, and people as well as companies lose their purchasing power as a result of increase prices.

PRICE INCREASES

Inflation is defined as an increase in the average price of goods and services, not including wages, which goes uncompensated by increases in income. These price increases can either occur over time or be a sudden, one-time event.

PURCHASING POWER DECREASE

Increasing prices without a commensurate increase personal or business income means that the currency suffering from inflation has a lower purchasing power. Fewer goods and services are available for a given sum of money, thus making people and businesses financially poorer.

INCREASED SPENDING

In some cases, a fear of increasing prices may trigger people to spend more. This increased spending adds to inflationary problems because it increases demand on a limited supply of products and services, thus increasing prices.

DECREASED SAVING

Because people and businesses may be afraid that the value of money will continue to decrease and that prices will continue to rise, the increased spending during inflation results in a decreased savings rate.

DECREASING BOND VALUES

Bonds are usually issued at a fixed interest rate. If a bond is issued at 5.25 percent and the inflation rate, or loss of currency value, is 8 percent, the bond holder is, in fact, losing 2.75 percent per year by holding the bond. People and companies holding bonds as investments not only lose the purchasing power of the cash they hold, they could lose money on their previously safe investments.