Will inflation stay at 3.7 per cent? Including the 2011 VAT increase, everything is going to cost my family more this year.

What can the government do to help?

Asked by Sally

1 Answer

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Answered by Darren Smith, IFA in Basingstoke, HAMPSHIRE
its a common misconception that VAT rising will impact on everyone as it wont. there is no VAT charged on many items including childrens clothing and most food items but some food items are vatable - there was a big court case as to whether jaffa cakes were cakes or biscuits as one pays VAT and the other doesnt.

other events impact on the cost of living, floods in asia blighted the rice crops, not good for takeaway lovers - other similar problems have hit other aspects of the food industry which will all increase cost as the supply has shrunk but not the demand.

there are also concerns about the cost of cotton as it too has been hit by the weather with many crops overseas lost to flooding.

in truth the inflation measure is the best example of an average as its highly unlikely that you will be a consumer of all the 600+ items whose cost comprises the CPI.

its a bit like me asking you the question: how warm are you? describe your perfect partner, what is your definition of beauty?

albeit very abstract, the above are also very subjective and the answers are not likely to apply to everyone.

it is easier to make a judgement over everyday items such as fuel and energy but we are all used to the gas and petrol prices going up, we should also be used to it being hyped in the news when clearly there is nothing else worth reporting.

the last (and probably next few) days have had coverage about the new labour shadow chancellor, be sure that if there is nothing else to report about we will all be hearing more about balls and johnson in excruciating detail.

remember, we are a nation that seems to thrive on bad news!

your comment, what can the government do, well really it should be what can we do, we are adults and therefore should be responsible for our actions.

"we" are always very eager to take responsibility for our successes - how many people do you know that have boasted about the money they have made buying and selling properties? and they did it all on their own - but when the market slumped - it was the governments fault or the banks!

its time for the nation to take a reality check!

in conclusion, things need only cost you more if you are not prepared to haggle and shop around, companies still rely on inertia stopping you from leaving them and that is why they get away with creeping up their prices. how many stores have increased their pricse by more than the VAT rise, and why? well we like prices that end in 99p or a round £ you wont find many items priced in something that ends in 3p. nearly always a multiple of 5, or 9/0.
| 01.21.11 @ 03:01
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Answered by

Darren Smith
Darren Smith, IFA in Basingstoke, HAMPSHIRE