Inflation rise 'adds to freelancers' cost concerns'
A steadily growing concern of many freelancers – the price they pay to run their single-person operation – has been shown as valid, as inflation shot up in May to a four-year high.
In fact, every major category measured by inflation-watchers at the ONS went in the wrong direction last month, for freelancers trying to shore up their bottom line.
Prices on cultural goods, which freelancers in the creative sector can be more inclined to buy, shot up too, contributing to the current rate of 2.7%, up only slightly (but again) from April.
Transport was the one welcome exception, as the ONS recorded falls in motor fuel prices, air fares and sea fares, although the latter two were influenced by Easter falling in April.
Nevertheless, freelance body IPSE has previously pointed out that the price of transport is significant for freelancers, as they ‘tend to travel longer distances for work than conventional employees.’
But reflecting on the May inflation rate, which the ONS calculates as being the highest since April 2012, IPSE’s economic policy adviser Lorence Nye suggested freelancers might be alarmed.
“There is cause for concern here because wage growth is lagging behind these price increases, putting a squeeze on households across the country,” he said.
“It’s not just consumers who are feeling the pinch: these price increases will affect small businesses too. IPSE’s Confidence Index shows that freelancers have been getting more and more concerned by rising input costs over the last 12 months.”
However, he said the advice was “not [to] panic just yet”. Elaborating, Nye said the Bank of England always expected inflation to reach around the current level, albeit just not yet.
“The increase has just come more quickly than they anticipated,” he said, referring to the bank’s end-of-year expectation.
“They’ve therefore said they won’t try to combat the inflation increase: both because the current level isn’t far off their target and because increasing interest rates at this point could actually do more damage to the economy.”
IPSE “strongly agrees” with the BoE’s assessment, and urged its monetary policy committee to “hold this position and continue providing clear guidance to businesses and households alike.”