In a statement on Tuesday, the Labor Department reported that its consumer price index rose by 0.6% last month, the largest net monthly gain since August 2012. The price increase follows an easing of 0.1% in May, and exceeds the rise of 0.5% predicted by economists polled by Reuters.

The increase coincides with the reopening of non-essential retailers and other businesses throughout the country, and continued anti-coronavirus stimulus spending that has driven the US budget deficit as high as $3 trillion over the past 12 months.

A hike in the cost of gasoline accounted for over half of the resurgence in consumer spending, with energy prices as a whole rising by 5.1% and gasoline itself rising by 12.3%. However, gas pump prices remain 23.% lower than they were a year ago.

Having risen by 0.7% in May, food prices also saw a further increase of 0.6% in June, contributing to the shift in the Labor Department’s index. Core inflation also rose by 1.2%, far below the Federal Reserve’s target of 2% in annual inflation gains.

It is yet unclear how the consumer price index will be affected by the decision of several states to reverse their reopening plans in late June and early July following a resurgence in COVID-19 cases.

The US economy has been struck dramatically by the COVID-19 pandemic, with the economy entering a recession in February and April seeing the greatest single-month fall in consumer spending since the 2008 financial crisis.

This has stemmed from the fact that in recent years, diesel has come in for a lot of scrutiny recently due to the levels of Nitrogen Oxide our vehicles emit. So much so that the government in the UK proposed plans to ban any sales of new diesel and petrol vehicles by 2040 as they try to clean the nation’s air quality.

We are currently being encouraged to make the transition over to electric and hybrid vehicles, but just what effect will this have on traditional fuel sources? Lookers, who offer a variety of car servicing plans, explore what the future of fuel looks like for the UK.

Will the prices of fuel fluctuate?

The reported on the yo-yo affair of fuel prices in the UK and noted a number of influencing factors. Brexit and harmful emissions to UAE conflict, have meant that fuel prices haven’t been steady for some time now – and a plan to eliminate petrol and diesel cars will not help steady the cost of fuel either.

After witnessing a three-year high in how much petrol and diesel was costing on the UK’s forecourts, the RAC and other industry experts have encouraged supermarkets to reduce their fuel prices to make the public be able to afford the fuel type. At the start of 2018, three of the UK’s leading supermarkets had listened to the RAC’s call for lower fuel prices, and reduced fuel prices by up to 2p per litre as of February 2018.

RAC fuel spokesman, Simon Williams, stated: “Both petrol and diesel are now at their highest points for more than three years which is bound to be making a dent in household budgets.”

“Both petrol and diesel are now at their highest points for more than three years which is bound to be making a dent in household budgets.”

In 2014, the OPEC made a decision to increase the level of domestic fuel production in the UK, which led to a price drop to 98p in January 2016 — the lowest price of fuel per litre since the financial crisis in 2009. However, the UK still heavily relies on imported energy and fuel – around 38% of the UK’s total energy consumption is reliant on imported energy. Could our trading relationships be at risk after Brexit? And, of course, we must also consider how the uncertainty around the value of the pound could affect fuel costs following Brexit.

Immediately following the UK’s decision to leave the EU, the value of the pound experienced a fall of 20% against the dollar. This caused fuel prices to increase by around 10p per litre and experts to raise concern that Brexit could mark the end of cheap fuel in Britain. The combination of higher crude oil prices and the devaluation of the pound mean Britain should expect higher fuel prices become the norm.

Electric Charging Hubs

You may know that the market of electric vehicles has been criticised since the mobile was launched.  This has been due to a lack of EV charging points raising concern for many drivers, but could a transition towards electric and hybrid vehicles see us eventually wave goodbye to traditional fuel?

Following in the footsteps of other countries around the globe, like New Zealand who are rolling out easier-to-find charging stations, in the past 12 months, the UK’s electric car charging infrastructure has evolved substantially to suit the lifestyles of many drivers with many more EV charger installation points appearing. The UK also has over 20 companies and organisations installing and running nationwide or regional electric car charging networks.

The UK’s electric car charging infrastructure has evolved substantially to suit the lifestyles of many drivers with many more EV charger installation points appearing.

BP have also stated that they would be adding an increased number of charging points for electric vehicles into their UK fuel stations within the first few months of 2018. Oil firms are also recognising the potential for growth into the battery-powered vehicle market. A decision that follows in the footsteps of their rival, Shell, who have already invested money in several electric car infrastructure companies to install charging points at their service stations. According to The Guardian, the British oil firm, BP, is also investing $5 million (£3.5 million) in the US firm Freewire Technologies, which will provide motorbike-sized charging units at forecourts to top up cars in half an hour.

Tufan Erginbilgic, chief executive of BP Downstream, commented: “EV charging will undoubtedly become an important part of our business, but customer demand and the technologies available are still evolving.”

A multimillion-pound deal with ChargePoint saw InstaVolt installing at least another 3,000 rapid charging points across fuel station forecourts across the UK. Some researchers have also claimed they could have developed an ‘instantly rechargeable’ method that recharges an electric battery in the same time as it would take to fill a gas tank – a solution to one of the biggest headaches of electric vehicles.

2017 turned out to be a record year worldwide. In November 2017, global figures hit three million for the number of electric vehicles collectively on the roads – with China proving to dominate the market. Whilst oil firms such as BP expect the electric market to continue to rise, they hope the oil demand is not seriously affected – by cutting themselves a slice of the electric vehicle charging cake though, firms are covering their back if traditional oil demand does take a dip in line with the government’s plans to reduce harmful emissions and cut back on crude oil prices.

While fuel’s cost looks like it’ll be uncertain for the foreseeable, it appears that both the high fuel prices and efforts to improve the UK’s air quality will cause the EV market to increase and success is forecast to continue to surge in the years leading up to 2040.

Sources:

We’re living in a data rich world. IBM estimates that 90% of the data in the world today has been created in the last two years alone. This means it’s crucial that businesses keep control of their sensitive customer data. Tanmaya Varma,  Global Head of Industry Solutions at SugarCRM, illustrates to Finance Monthly the true potential of data use in the financial services sector.

For banks in particular, the safe and efficient storage of data is not just a ‘nice to have’ but a requirement governed by legislation and industry standards. I believe that whether on-premise or in the cloud, banks should strive to capture all their customers’ data together in one place. Why? Because it will empower employees with the right information to give customers the best experience possible.

Bringing together data streams

Perhaps more than any other industry, financial services firm have a huge number of channels to collect customer data from; in-branch, over the phone, via social media platforms. This means they need to have the right data systems in place which can bind together all of their data to build a complete picture of a customer.

The right system needs to bring together front-office data – calls, meetings, leads, opportunities – and back-office data – accounts, transactions, delivery schedules, fulfilment and so on. There is also a need, particularly for capital markets, to have external data integrated, for example LinkedIn data (where did this prospect use to work?) and trading figures.

In terms of where the data is stored, in my experience banks generally choose to keep their customer data in the cloud. No modern business – bank or otherwise – should keep their customer data in siloes, as this immediately breaks a 360-degree view of the customer.

Meeting customer expectations

Today’s customers expect the best experience possible. The instantaneous pace we now live at doesn’t leave much time for patience – so consumers expect an instant response to their demands.  This means customer-facing employees need to have easy access to their customers’ background as soon as the interaction begins, if they are to stand a chance of delivering the best possible experience.

Customers need to know that, regardless of the channel, they’ll receive the same level of service and understanding of their needs and expectations. This all amounts to the overall customer experience, which is crucial when customers are faced with so much choice. The threat of losing customers because of bad service is very real. According to Accenture’s UK research, 34% of customers who switched financial providers in 2014 did so because of a poor customer service.

All customer-facing teams (sales, marketing, customer service and so on) therefore need to have the right tools in place. Technology should empower employees in their interactions with customers; giving them all the information they need, when they need it. For example, providing clear information on the customers’ previous interactions (when did they last contact us? What other products do they hold with us?) – to enable a seamless experience which proves to the customer they are valued and understood.

Turning to technology

Looking ahead, AI will become increasingly important for banks when it comes to the customer journey. Many banks are already open to the possibilities of machine learning – and it has to be said, the capabilities of chatbots is becoming very impressive. Swedbank’s web assistant Nina, for example, now has an average of 30,000 conversations per month and can handle more than 350 different customer questions.

But the customer experience depends on both the quality of the data, and how well employees can use it to then bring insight to their interactions. In my opinion, customer-facing employees and technology should work side by side to enrich the customer experience. The role of chatbots, virtual reality, NLP and so on should be to bring efficiencies to business operations, particularly when it comes to automating tasks and processes where humans don’t add value. In fact, a recent report by Accenture found 79% of banking professionals agree that AI will revolutionise the way they gain information from and interact with customers.

If banks rise to the challenge to store and manage all their data together, and their employees are supported with the right training and technology to quickly access customer data and understand – and even pre-empt – their needs, they’ll be on the path to success.

Last week reports indicated that UK inflation had reached its highest point in two-and-a-half years in December, after an unexpected rise in core prices pushed top levels upwards 1.6%. Here Finance Monthly benefits from an exclusive in-depth breakdown by Market Analyst Jonathan Watson at currencies.co.uk, who explains how recent spikes in inflation can have a dramatic effect on consumers, business and the rest of the public.

Inflation, the rate at which prices increase is in itself not a bad thing. However, in certain economic circumstances it can cause problems, particularly for the public at large. The UK as a net importer buys more from overseas than it sells. That means that when the Pound is weak or has a big fall as has happened since the Referendum vote, the cost of importing goods goes up. With the Pound expected to remain weak Inflation is expected to push higher in 2017. The good news is that wage rises are increasing as well, the bad news is that it might not be enough to keep pace with the headline rates of inflation in the wider economy meaning the public will overall have less money in their back pocket.

UK Inflation

Inflation is the rate at which prices rise. In an economy prices are continually changing according to various economic, political and social reasons. A degree of Inflation is acceptable and welcome in an economy since the opposite ‘deflation’, where prices fall is most unwelcome as it can severely hamper an economy as consumers and business delay purchases, anticipating their purchase will be less costly in the future.

In the UK Inflation is targeted at 2% and the main measure used is the CPI or Consumer Price Index. This looks at a continuous ‘basket of goods’ and assesses their changes in price over time. The latest Inflation report showed 1.6% which is the highest reading since July 2014. Throughout history there have been some big swings in Inflation, in the 70’s it was over 25%.

How does it affect the public?

Rising Inflation pushes up prices so the main effect on the public is to make goods and services more expensive for consumers and business. Rising prices therefore puts more of a squeeze on consumers as they have less money to spend. It puts pressure on businesses because they have to make a decision on either raising prices to cover their increased costs or reducing their profits. This negative impact on business impacts the public with either higher prices to the consumer or the prospect of workers being laid off as the business has to cut costs. Overall spending in the economy therefore declines as consumers and business have less money to spend as a result of the higher prices.

For example, fuel prices have been rising since oil is priced in US Dollars. The price of oil has risen globally (in itself an inflation boosting factor) but the fact the price of US Dollars has increased over
20% since the Referendum result further exacerbates this issue. Rising fuel prices will be an unescapable cost to the some 30 million cars on conventional roads. Businesses reliant on road haulage will see increased costs. Much of the UK’s food in supermarkets is delivered by road and therefore affected by fuel costs. Rising fuel inflation is a classic example of a negative effect for the public. It will mean the individual consumer will have to shell out more to fill their tank to drive to and from work and to take the kids to school. And when they finish work and stop to pick up their food to eat, there is a good chance Inflation will be making their weekly shop more expensive too.

There have been numerous high profile cases of rising food prices themselves. Back in October Tesco and Unilever fell out famously over the price of Marmite amongst others. We were told this would be the beginning of many such cases and almost weekly we are hearing fresh news of a household brand putting up prices. This weekend reports Nestle put up prices of coffee 14% will not be the last in this ongoing saga. One way or another rising prices feed into the wider economy. According to the Sunday Times Sainsbury’s raised the price of Nestle coffee by 14% this weekend whilst raising another Nestle product Pure Life Spring water 22%.

But it is not just necessities such as fuel and water that has risen. Luxury goods as such have also risen as international brands not only respond to the fact a weaker Pound means less value in their own currency, but also to try and keep prices harmonised globally. It was reported that Brexit saw a surge in luxury product sale in London as wealthy foreign shoppers arrived to take advantage of the cheaper products. Examples include Rolex, Burberry and other luxury items. Many of these brands have increased the price of their goods. Rolex last year raised prices by 10%, Apple increased the price of all their products last year too. And more recently raised the price of apps in their app store.

What does the future hold?

The key concern is whether Inflation will rise faster than wages. So far wage increases are running around 2.8% whilst CPI is as reported 1.6%. The worry is that wage inflation will not be able to match the price of CPI throughout 2017. The National Institute of Economic and Social Research (NIESR) have predicted inflation may rise to 4% this year.

This will mean consumers will have less money in their pocket which exacerbates the problems outlines above of less money in the economy. Retail Sales in December were much lower indicating the higher prices in the shops are starting to bite. Many business importing raw materials and products from outside of the UK will have hedged on their currency some 12-18 months ago. They will therefore have not yet been forced to raise prices as they are not buying at the new lower exchange rate. With the Pound having dropped some 10-15% since the Referendum eventually the UK as a net importer will have to pay more for the goods and services it is buying from overseas. 2017 will be the year this starts to become much more apparent.

One tool to combat Inflation is to raise interest rates but this can have its own implications. For example as interest rates rise it will help savers but put up repayments for borrowers. Credit card debt has been rising to almost pre-crisis levels prompting the Bank of England to warn it is closely monitoring this situation. If Inflation rises dramatically an interest rate hike is very likely but whilst this will help cool the inflation rise (and help Sterling strengthen) the potential negative factors on borrowers is probably not worth the benefit to savers.

All in all, some Inflation is good and welcome in an economy, but if it starts to bite too much into people’s back pockets and in turn hurts business and the wider economy this is not good. Rising Inflation can increase Unemployment, lower GDP and dent both business and consumer confidence. With the weak Pound being a key contributor to rising Inflation and the Pound likely to remain low in 2017 and beyond, rising Inflation is an issue that is going to continue to affect the public until it is understand what Brexit actually entails.