UK inflation unexpectedly rose this August to the highest level in six months.
Economists expected the consumer price index (CPI) rate to fall to 2.4% from 2.5% in July. Instead, it increased to 2.7% last month, according to data from the Office for National Statistics.
A hike in prices for the likes of theatre tickets and new autumn-winter clothing ranges were responsible for the rise.
Living standards at stake
“The surprise increase will prove unwelcome for hard-pressed British households, which had finally begun to see wages rising above inflation earlier this year, following a protracted squeeze on living standards triggered by the Brexit vote,” a report by The Guardian said. “Workers’ pay rises are gradually increasing, although they remain perilously close to inflation.”
Indeed, the pay squeeze is tightening again. And bodies such as the Trades Union Congress said the government is doing nothing to get wages rising faster.
Government must do more
“The minimum wage should be put up to £10 an hour as quickly as possible,” TUC general secretary Frances O’Grady said. “And we need a National Investment Bank to target communities that are most in need of new industry and better jobs.”
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However, the Association of Independent Professionals and the Self Employed (IPSE) said that freelancers will feel the impact more than employees.
Rising business costs
“Freelancers will be especially hard hit by this jump in inflation not only because, unlike employees, they pick up their own business costs, but also because they travel more to win and work on different contracts,” Jordan Marshall, IPSE’s policy development manager said. “They will particularly feel the effect of the 13.5% jump in air fares. This is because many of them take up contracts overseas and travel long distances in the UK.”
IPSE said that this will be compounded by the fact that in the current job market, freelancers will struggle to ensure their earnings keep pace with the rising cost of living.
The government’s intentions to go ahead with IR35 reforms in the private sector won’t help matters either.
“The UK’s 4.8 million self-employed fear extra costs if the Government confirms its damaging changes to IR35 tax,” Marshall explained.
And yet despite these pressures, many freelancers share a positive outlook about their business. “IPSE’s Freelancer Confidence Index shows that freelancers’ underlying confidence in their businesses is still robust, with the majority expecting their business performance to improve in the next 12 months,” Marshall said.