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How Budgeting Like Our Elders Could Help Us Through This Recession

Summer of 2022 will certainly be one for the record books. Not least because it represents the (probably inevitable) demise of Boris Johnson, but also because of its frightening economic situation. On 17th August, the Office for National Statistics (ONS) reported that the UK inflation rate is now in the double digits at 10.1%. The steepest price changes were on bread, cereals, milk cheese and eggs…for many, the essentials. 

Most of us will have heard the word “inflation” in headlines lately alongside worrying numbers about today’s economy and equally pessimistic predictions about the future economy. Financial media site, Investopedia, defines inflation as “a rise in prices, which can be translated as the decline of purchasing power over time.” Put simply, inflation refers to changes in the price of goods over time. 

Specifically, it is the consumer price inflation rate that is most relevant to the general public. This indicator refers to changes in the price of goods purchased by domestic households. Interestingly, low and stable levels of inflation are expected and can even be good for the economy – the Bank of England aims to keep the inflation rate at 2%. This is a far cry from the current rate of 10.1%.