This summer, UK inflation rose above 10% for the first time since 1982 putting the strain on people and businesses all over the country.
In fact, inflation is affecting industries all over the world, and the issues could persist for some time. There are multiple factors at play affecting the rate of inflation including the Russian war on Ukraine affecting crude oil and food prices. In addition, the Covid pandemic led to the Bank of England printing additional money to buy bonds in financial markets.
While most businesses across the country will no doubt be feeling the effects of inflation over the coming years, some industries are better positioned than others. Inflation affects those that fabricate and process raw materials the most. Producers of raw materials typically get a better deal, and real estate companies are also less affected.
Consumers will also be badly affected by the cost of living crisis, which is likely to have a knock-on effect on companies that sell directly to consumers. This is particularly true of luxury industries, while those that sell essentials are better placed. On the other hand, digital service industries may prosper and thrive due to providing essential services to businesses looking to become more efficient.
How Digital Services Help Businesses Become More Efficient
Digitalisation is the process of implementing digital technology into a business, using software tools and digital techniques to create a more efficient and competitive company. In the modern world, businesses that fail to digitalise will get left behind by the competition, especially with price rises. The right digital processes can help a business make more sales, save costs and deliver better results.
There are many different digital services that companies can benefit from including cyber security, digital marketing and cloud storage. As the demands of a business grow, using these services becomes more important than ever. AWISEE, which offers Link Building Services, has seen an increase in demand in the past few months due to more businesses looking to digitalise and gain a competitive advantage.
The right digital services can help UK businesses avoid the effects of inflation and its why digitalised companies are less likely to feel the strain right now. In addition, those companies that offer digital services are unlikely to be as badly affected by inflation as some others, although they will still feel the effects.
How Long Will UK Inflation Last?
It’s unclear how long inflation will last in the UK. Currently, the Bank of England has forecast that inflation will rise again during the autumn, likely to increase to 13.1% and peaking in the winter. However, it also predicted that the high rate of inflation won’t last and will subside again before falling to 2% within two years. This will be a relief for the businesses and consumers around the UK who are currently feeling the pinch.
Other economists have argued that the effects of inflation will be felt for many years, as previous rises have had knock-on effects on the global economy. When inflation has risen above 9% in the past, it’s taken several years for it to return to normal. If these levels of inflation do last for years, it could seriously impact a lot of UK businesses, and it’s important for them to prepare now.
How long it takes for inflation levels to return to normal will be affected by the measures that governments introduce to tackle them. Typically, raising interest rates will help to combat high inflation but this also makes borrowing money and mortgages more expensive. In addition, the current levels of inflation are partly caused by an energy crisis. As a result, there are fewer options that the Bank of England can take to reduce the rate of inflation.