Ever feel like whenever the economy takes one step forward it takes two steps back? Yeah me to. In the space of a couple of days we have had news that the big six energy companies are AGAIN raising their prices beyond reasonable amounts, and then just today we had news that CPI inflation dropped to 2.2%. Extremely close to the Government target of 2%.
Lets look at the good news first. The rate at which costs are rising is slowing. Good news if you have any sort of regular expense at all. Not so good if you receive benefits however as this months inflation figures for some reason determine the amounts of benefits paid out next year! Why this is I don’t know. The last Government set a target for inflation at 2%. They believed that this was a sustainable level for the country to cope with. I agree. However, bar August, most of this year has seen inflation fall from 5.2%. We need to be careful that inflation doesn’t become deflation in the months to come. Deflation means a less valuable currency, good and services become less valuable which will make bills harder to pay. Deflation can lead to much more serious problems if it carries on long term. So lets keep it to 2% eh?!
Now the bad news. The big six energy companies have all announced prices rises ranging from 6% to 9%, which is going to push yet more families into fuel poverty. What I don’t understand is why there hasn’t been an investigation into this yet. Take banking. Some internal digging around revealed the LIBOR fixing scandals. Now there are investigations into the oil industry which is likely to throw up some very similar results to LIBOR. I’ll bet anyone a tenner that if there was an investigation in to the energy markets then there would be again some fixing and cartel-like activity going on.
Until that day, we’re unable to do much about that. But what this does highlight is the need for us all to become more energy efficient in everything we do. At home. At work. On the road. The more efficient we can become, the less we will have to rely on the energy companies and the less money we put in their already obese back pockets. I would also like to reiterate my point about our industry needing to become more efficient at it’s core. Our reliance on oil will at some point in the short to medium term need to come to an end. Oil is a resource which is rapidly become scarce and becoming un-affordable and we won’t be able to rely on it to make virgin PVC and polymers. Our industry needs to build specialist recycling centres like the huge one Eurocell have built to encourage the industry to hand in post-consumer waste for it to be turned into new PVC windows and doors. We also need to keep researching into alternative forms of synthetic oil, like the ones produced from sustainable crops.
Rises in energy prices are bad, but they do also highlight the large amount of work that needs doing still to make sure all things don’t go Pete Tong!