By 2021, inflation had exploded. A mere 0.7% inflation rate in January 2021 indicated a gradual increase in the cost of goods and services. But inflation started to pick up steam by the summer of 2021. The UK's inflation rate increased from 2% to 3.2% between the months of July and August, and it has since been trending upward. The inflation rate was a staggering 4.2% by October, and by November it had risen to 5.1%. It had been more than 11 years since the UK had had a rise this large in inflation from October to November.
Only three months in 2021 had no month-to-month increases in the UK's inflation rate. February, July, and September fall within this category. Between June and July, the inflation rate fell by 0.5%, which was the largest month-over-month decrease. The UK's inflation rate increased by 1.2% between July and August, which was the period of greatest inflation.
The rate of inflation in November 2021, at 5.1%, was the highest since September 2011. The Bank of England moved by raising its base rate for the first time in three years the day after November's inflation data was made public.
Following the Covid-19 pandemic's outbreak in March 2020, circumstances altered. By November 2021, the UK's inflation rate had risen significantly to a staggering 5.1%. The government's economic reaction to the epidemic may be to blame for the current spike in inflation in the UK. This is due to the fact that politicians borrowed billions of pounds to pay for a wide range of economic support programs intended to aid businesses affected by the outbreak.
Despite the UK's very high inflation rate in November 2021, it's crucial to remember that prices are growing at comparable rates in other nations throughout the world. For instance, the inflation rate in November 2021 was 5.2% in both Germany and the Netherlands. Spain had a rate of 5.5%, while the Eurozone as a whole had a 4.9% inflation rate.
Some people may decide to invest in order to shield their money from inflation. That's because, although there are no guarantees, stock markets often outperform inflation over the long term. It's critical to understand that saving and investing are two very different animals. That's because investing puts your entire financial situation at danger. It is therefore not a foolproof strategy to combat inflation.