Bank On The Expected

Putting it Away for a Rainy Day!

When the sun is shining and everything in the garden is blooming and marvellous, life couldn’t be better. Homework’s done; pocket money’s in; plans are made for the weekend; bliss!

But when it rains – and we’ve experienced a lot of that, recently – things can change dramatically and quickly. Plans we had made have to be altered or cancelled. What seemed so obvious one day is totally different the next.

Setting Our Interest Rates

And this is exactly what happens when events around us alter the state in which we live. For instance, let’s take the interest rates, set by the Bank of England. How would that affect us? Simple - interest rates have a direct bearing on how much the house mortgage is going to cost each month; on how much goods in the shops will be sold for; on virtually everything we do – from watching television to going to the cinema.

Blame it on Borrowing

If the cost of borrowing money increases, the people who are doing the borrowing – banks, businesses, shops, places of entertainment – have to increase their prices to cover their own costs. It’s a spiral, and even pocket money gets caught in the squeeze.

Talk About the Weather

But it’s not only interest rates that can effect our lives. Things and events completely out of our control can do the same. Look at climate conditions and the weather, for instance. Floods and drought have caused the cost of raw food materials to shoot up by far more than the cost of inflation. Wheat has become more expensivet. That means that the cost of a loaf of bread has risen, considerably.

When China Sneezes...

When you add the fact that China is needing more and more wheat for animal food and they need to get that wheat from anywhere that has it - sometimes at premium prices - you can see how and why prices do rise.

Friendly Fuel

Sugar beet (one type of beet) was used for food in the past. Now a lot of it is used for bio fuels in our efforts to reduce carbon emissions and use environmentally friendly fuels. One third of America’s maize crop is now being used for fuel, as well. What does this mean? The cost of food will increase.

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