Many people have stated that the high price of wholesale gas has led to massive hikes in the unit cost of electricty and gas in the UK. OK, I sort of get that, the wholesale price of energy is driven by world demand, so if demand outstrips supply then prices rise and that leads to higher inflation. But, how does a rate increase of 0.5% (the biggest rise since 1995), push down the price of energy?
I’ve read that a lot of small businesses in the UK are struggling with new fixed price deals which are up to 400% higher than their previous deals. In the hospitality sector, they’re struggling with higher food prices and higher prices for beer and wine too. How does increasing the cost of their credit lines help them? Many households have less disposable income now due to energy inflation, how does raising their mortgage payments help the economy?
From where I’m sitting, The Bank of England has acted simply because it needs to be seen doing something, but, the reality is that it has potentially made recession much more probable. It certainly hasn’t helped with my struggles to afford energy this winter.