Great Bargain in Recession
Tuesday, February 24, 2009 9:38
According to official figures last week, inflation has tumbled to the lowest level in almost 50 years, and the UK is likely to be in deflation within months.
The Office for National Statistics announced a fall from 0.9% to 0.1% in January of the annual retail prices inflation, on which most wage deals are based. It became the lowest annual rate ever since March 1960, and is likely to turn negative later in 2009. But the consumer prices index, which is the government’s preferred measure of inflation, was higher at 3% as it does not include mortgage costs.
Though the sharp fall in prices with everything ranging from cars and clothes to air fares might be bad news for the economy, they are great news for bargain hunters. With inflation falling like a stone, this suddenly turns to be some positive news out there.
As the recession bites, certain industries are more exposed to cuts in spending. Here go some winners from barely-there inflation and trawl the high street and internet for the best bargains.
1. Cars
According to the Society of Motor Manufacturers and Traders, new-car dealers just suffered their worst January ever since 1974 with registrations down by 31% in a year.
According to the ONS consumer-prices figures, in January, buyers are paying an annual 5.5% less for new cars and 15.4% less for second-hand ones, as the rate of decline accelerated from 5% and 13.5% respectively last December. With demand falling at rates not seen since the Great Depression, dealers are offering great discounts of up to 50% or more to sell excess stock.
2. Flights and Holidays
Holiday plans are being cancelled or modified these days. Budgets on leisure spending have been greatly cut.
As a result, airlines seems to become some of the biggest victims of the market downturn as most consumers rein in their purse strings. There are also great hotel bargains to be had at the same time.
3. Clothes
The costs of clothing and footwear fell by an annual 10.6% in January, slightly less than the annual fall of 10.8% in December. It shows a heavy discounting of retailers in the run-up to the festive season.
The traditional January sales seems likely to continue even into March.
4. Services
Education, dry-cleaning, gym and magazine subscriptions, and optical services account for a large proportion of spending by high-earners. According to ONS figure, rich families are spending many times more on these services than normal household.
However, as the previously free-spending upper middle classes cut back on consumption during the recession, all these businesses are trying to attract more custom by offering huge discounts.
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