Inflation and deflation play a huge role in affecting a country’s economy. Inflation is the rate at which general goods and services increase, whereas deflation is just quite the opposite.

Prices have constantly been rising for the past 30 years in the UK, precisely petrol and diesel costs. In February, the UK inflation rate was 6.2%, while in March, it rose to 7%, becoming the highest rate since 1992.

Reasons for the high rise in inflation rate: 


The inflation rate was largely impacted by fuel. The average price of petrol increased by 3.5p per litre from February to March 2021, while during the same months this year 2022, the price went up by 12.6p per litre, recording the highest monthly rise since records began in 1990. Similarly, diesel prices also took a huge hit. The diesel prices rose by 3.5p per litre last year, whereas it rose by 18.8p per litre this year. 

Post covid: 

After lifting of the lockdown restrictions, prices have increased drastically, resulting in firms and consumers to pay high energy and shipping costs. 

The war between Russia and Ukraine: 

As Russia is the largest exporter of oil in the world, demand from other producers has increased highly, causing prices to rise. Even though Russia only exports 6% of crude oil into the UK, the rise in global prices drastically affects the rates. Furthermore, prices have risen of sunflower oil as Ukraine and Russia are the world’s main suppliers.

In March, the UK saw an increase of 7.2% in the price of food oils and fats. 

Moreover, the products affected by the war were wheat-based foods, sunflower oil, chicken and white fish. 

Household fuel bills: 

Beginning of April 2022, approximately 18 million households’ annual bill rose from £ 1,277 to £1,971. Therefore, noticing an increase in the average price of £693. 


The tax paid when buying goods and services is increasing for some businesses. During the pandemic, the government had reduced this for hospitality and tourism firms, but from April 1 2022, it has returned to the normal 20% rate. 

Other rates: 

Air passenger duty and vehicle excise duty rates are increasing. In England and Wales, rail fares have increased by 3.8%, the highest in 9 years. Additionally, higher interest rates are affecting some homeowners making mortgage payments expensive. 

The analysts expected the inflation rate to be 6.7%, but it was higher than that due to the high rise in furniture, restaurant and food prices. This rise in prices is pressuring the government to help those having a hard time as the prices are increasing more rapidly than the wages.

There was a rise of 3.8% in wage prices between November and January. When considering inflation, regular pay decreased by 1%.

Increasing prices are affecting the cost of living, wages, benefits and pensions. Millions are getting concerned, and people may have to make huge changes in their everyday lives if the prices keep rising.