Deflation shouldn’t cause concern for contractors
The media was overwhelmed with reports of the slip into deflation this week as there were concerns over the impact this could have on various sectors of society, but the Association of Independent Professionals and the Self Employed were keen to reassure those who work for themselves. The latest consumer price index may show a slight fall, to a rate of -0.1 per cent, but IPSE believe that this is a good thing for those who work for themselves.
Responding to the news, IPSE’s economist, Laurence Nye, highlighted that low prices were an essential element to keeping down the costs of doing business. With many sole traders, contractors and other independent professionals finding it increasingly hard to keep up with the basic costs of doing business, this can only be a good thing for those who may have been concerned about affordability.
The body has conducted research which suggests that, on average, the daily rate for contractors is still on the rise, which, when coupled with the decreasing costs of their outgoings, should mean that they are better off financially in real terms. One of the key aspects that economists believe has contributed to the current deflation is the lowering of fuel costs, a move which will be welcomed by independent professionals who will be keen to make savings wherever possible.
The Bank of England has a target rate of 2 per cent inflation, meaning that many commentators are questioning whether the Monetary Policy Committee should reconsider their plans to raise interest rates to ensure that such a move won’t have a negative impact in the light of this week’s announcement.
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