Food price rises spell further uncertainty for economy, say Gregory
Pennington
Released
on: September 17, 2008, 9:25 am
Press
Release Author: Gregory
Pennington
Industry:
Financial
Press
Release Summary: Following 10% rises in food prices in the year
to August, debt management company Gregory Pennington have advised
consumers to take active care of their finances, and warned that
prices may continue to rise even if overall inflation slows.
Press
Release Body: Responding to a recent report suggesting food prices
have risen by over 10% in the past year, debt management company
Gregory Pennington (www.gregorypennington.com)
have advised consumers to take active care of their finances,
and to seek debt help if outgoings become unmanageable.
The
report by the British Retail Consortium (BRC) showed that the
sharp rises in wholesale costs in the past year have been passed
on to consumers, with fresh produce price rises surging as high
as 11.9% between August 2007 and 2008.
Many
analysts have suggested that this was the reason behind the Bank
of England’s decision to hold interest rates at 5 per cent
for the fifth consecutive month – where previously a drop
was expected to help stabilise the economy – in a bid to
avoid a recession.
A
Gregory Pennington spokesperson commented that this decision spells
further uncertainty for the economy. “The Bank of England
are in a tricky situation: raising interest rates would help to
bring down inflation, but it could be extremely damaging to the
housing market. Likewise, lowering interest rates would help the
housing market, but could mean inflation rises further.
“The
Bank of England have been hoping that inflation will come down
naturally – possibly due to a fall in oil prices –
in which case they could safely lower interest rates. But as things
stand, any change in interest rates could damage the economy in
one way or another, so the safe option is to leave rates as they
are.”
The
spokesperson went on to explain that problems with rising inflation,
particularly food prices, look set to continue – even once
the Bank of England change their base rate. “Since interest
rates are expected to fall, inflation may well continue for some
time, since there will be less incentive to save,” she said.
“The thinking behind it is that lower interest rates will
kick-start the housing and credit markets, which some economists
believe is the underlying cause of instability in the economy.
Once that is rectified, inflation may begin to slow.
“But
food prices are heavily affected by external factors, such as
prices in the country of origin – so even if overall inflation
begins to slow, we may see food prices continue to rise for some
time yet.”
The
Gregory Pennington spokesperson advised consumers to continue
taking preventative measures to minimise the impact of rising
food prices. “Compromise is key. People should consider
what their essential costs are, and budget accordingly. Then consider
saving as much as possible of what is left over.
“There
is an ongoing danger that as prices get higher, more and more
people will see their disposable income diminished, and in some
cases, outgoings may begin to exceed their income. If it gets
to that point, it’s time to seek debt help from a professional
debt adviser.
“There
are a number of debt solutions available that could help to reduce
monthly payments for people in need of help with debt. A debt
management plan or debt consolidation loan, for example, can allow
monthly payments to be rescheduled over a longer period of time
than the original debts, making each payment smaller,” he
said. “But be aware that this could result in paying more
interest in the long run.”
Web
Site: http://www.gregorypennington.com
Contact
Details: Pennington House
Carolina Way
South Langworthy Road
Salford
M50 2ZY
Melanie Taylor
melanie.taylor@gregorypennington.com
0845 056 6480
2012
