As reported by the Office for National Statistics, UK consumer inflation just reached its highest level in more than a year, driven by high food and fuel costs. One of the strongest measures of the cost of living, the Consumer Prices Index (CPI) shot up more than it has since 2001.
At the same time the Retail Prices Index - which shows movement in prices for average consumers at the retail level - also moved substantially higher.
While the data confirmed official fears of rampant inflation, it came as no surprise to ordinary consumers across the UK. They have been stung by rising prices for several months, and to most people in the UK the latest government figures only validate a struggle they contend with on a daily basis. Unfortunately the situation is only expected to grow worse over the coming months, with no significant relief in sight.
One place they may still be able to turn for help, however, is the so-called "bad credit" loan market. Those who offer these special loans design them specifically to serve the needs of UK consumers who have poor credit, not good credit. Bad credit loans can provide emergency funds or they can be used on a longer-term basis for mortgages, car purchases, home improvement, or other necessary expenditures.
While bad credit loans have been around for decades, they are gaining wide popularity of late because they are especially helpful during difficult times of recession or consumer inflation. Today Brits seem to be facing not one, but both of these challenging economic forces at the same time.
The CPI measured a dozen different categories of items and found that seven of those had experienced price increases. Everything from tobacco to petrol to electricity and gas has gotten more expensive for consumers, and with manufacturing output slowing down that will only shrink supplies, increase demand, and push prices higher still.
The outlook for UK inflation has "deteriorated markedly", the Bank of England governor Mervyn King has said. King said it will take time to rebuild a sense of confidence in the banking system and during that period credit conditions will be more difficult than normal. He added that house prices were set to fall even more in 2008. The Council of Mortgage Lenders agrees. That organization predicted that house prices continue a precipitous fall through the end of the year, and will possibly reach the lowest levels in nearly 40 years.
As a result, banks are adopting what they call a "more sensible and prudent approach to lending and borrowing," and that translates into greater scrutiny of personal credit histories and income levels. Loan approvals have dropped 40 percent since last year, reports The Guardian, as banks tighten their purse strings and reject consumer loan applications that do not meet the most stringent standards.
Meanwhile companies who offer loans for bad credit are seeing a resurgence of business activity, as customers with blemished credit take advantage of more lenient and considerate policies when they go to apply for their loans.
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