Inflation influences all our daily lives, and can have a major effect on consumer confidence. One of the biggest expenditures for a large part of the population is petrol and diesel. We’re a car loving nation, but in recent years external factors have sent the price at the pump on an upward trajectory. Recently, however, things have started to change. A recent report in Thisismoney.co.uk predicts that petrol prices will continue to fall in 2015. Here, ExSell7 look at this report, and consider the implications it could have for UK businesses.
“Not so long ago, it seemed that petrol prices were rising on a daily basis”, said the, director of ExSell7. “With so many people reliant on their vehicles, this was a major inflationary cost for them. With wage rises failing to keep pace with fuel price rises, consumers were being hit in the pocket. Consistently lower prices should provide a boost to consumers and to the economy.”
The price that we pay at the forecourt is largely reliant on the price of crude oil. This is the basic ingredient from which petrol is refined, and is a major determinant for fuel costs. The report looks at how the cost of Brent crude has fallen sharply in the last half year, and is likely to do so in 2015 as well. The price of crude has dropped from well over $100 a barrel in June, to under $78 a barrel now, representing a 30% plummet. Oil prices fluctuate so wildly because they are driven by supply and demand. With demand lower than expected from Asia, and alternative supplies of gas coming via fracking sites in the United States, the price continues to fall.
Lower petrol costs aren’t the only benefit that consumers will see. Crude oil costs are also a major influence upon the retail cost of gas. This should mean lower prices for household fuel bills, as well as automotive fuel bills. Because the gas supplying companies buy stocks in advance, however, it may take some time for the lower prices to be represented in gas bills. Overall, however, there’s little doubt that consumers may feel much better off as a result of the crude plunge.
“Consumers are going to notice the extra money in their pockets, and that means they’ll have more spending power”, said Dylan Henry. “Businesses should be ready for this, and step up their advertising and promotional campaigns. Entrepreneurs who show consumers why they should spend their windfall on their products, can really benefit.”
Businesses across the UK can also benefit from the innovative marketing campaigns of ExSell7. They specialise in acquiring new customers, and increasing brand awareness.