As soaring coronavirus infection rates have left millions of us in lockdown and forced increasingly arduous restrictions on huge swathes of the economy, something else has been quietly rising too behind the scenes - and that is the cost of living.
The latest figures from the Office for National Statistics show that consumer price index (CPI) inflation jumped to 0.6% last month, from 0.3% in November, with higher prices on clothing, transport and cultural activities the key drivers behind the rise.
Not all that unusual in ‘normal’ times, during the festive season just gone, when everything was anything but normal, there was an even larger-than-normal increase in transport costs. The price of flights usually rises around Christmas and New Year, but this time the price hikes were higher than you might usually expect to see. “Despite the travel restrictions in place in December, prices for air fares followed their usual seasonal pattern, with price increases between November and December 2020, albeit by more than between the same two months in 2019," the ONS said.
Clothing prices also rose "fractionally" in December, a month in which they typically tend to fall as retailers attempt to lure in shoppers keen for a good deal as they snap up plenty of new clothes for the party season. While price rises on children's toys, computer games and consoles, which you can understand would be higher in lockdown with little else to do, also helped push the cost of living higher in December.
Large parts of the UK’s beleaguered retail sector though will still probably be wondering how they managed not to see any of this rise as the latest round of trading updates from the sector continues to show how tricky times are for retailers.
Burberry (BRBY), the luxury fashion brand, has today reported a 9% fall in third-quarter comparable store sales as discounted items and reduced tourist traffic, which it depends so heavily on, offset the high single-digit full-price sales growth it did manage to achieve.
With 15% of its stores closed and 36% operating on reduced hours or with restrictions, it said the outlook remains highly uncertain. It expects ongoing regional disruption but said that in terms of full year trading, it still expects gross margins to benefit from “positive full-price, regional and channel mix and lower stock provisions.” So you could say, an appropriately chequered outlook.
Elsewhere at electrical goods retailer Dixons Carphone (DC.) the impact of lockdown living and raised prices on consoles has helped send like-for-like revenue in electricals 11% higher. And that was in spite of physical stores remaining shuttered for a large amount of that time.
During the 10 weeks to 9 January 2021, electricals like-for-like revenue grew 11%, as households splashed out on large screen TVs, smart tech, computers and gaming equipment.
UK & Ireland electricals like-for-like revenue grew 8% as online growth was 121% and the division increased market share by 6%. The trend continued overseas too, with international like-for-like revenue up 14%, with the Nordic region the top performer up 19%. Only Greece saw a slump, down 13% on the back of a national lockdown. And looking ahead, the company said it expects full year profits to come in line with market expectations.
One company that has reaped the rewards of lockdown, and which will see its coffers boosted even further after price hikes in the UK, as well as the US and elsewhere, is Netflix.
The US streaming giant now has more than 200 million paid members, up more than 30% from 2019. About 37 million people subscribed last year, 8.5 million of them in the last three months alone.
As a result of so many new customers flocking to its streaming service, revenue rose 24% in the most recent quarter to $6.6 billion (£4.8 billion), while profits hit $542 million. For the year, it reported nearly $25 billion in revenue and almost $2.8 billion in profits.
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