It was back in the 1960’s when we last experienced deflation in our economy and we have become so used to inflation ever since, with continual price rises, that it has been accepted as the norm.  Now that April’s figures have shown that we are actually in a deflationary period, is it something for us to worry about? Food prices and petrol and diesel costs are mostly responsible and some blame has been put on when Easter fell, pushing up last year’s figures but not calculated for this year.  Statistics can be dangerous.  Yes, they are an indicator but, given that each year differs in the timing of bank holidays would we ever get a like for like comparison?

The Governor of the Bank of England has no great concerns and indicates that small inflation will be back before the year end and we are not in danger of the deflation experienced in Japan.  In the world of business or politics, someone’s bad news is usually another person’s good news!  And here we have George Osborne citing deflation as good news with lower prices for consumers while wages are growing, unemployment is falling and the economy growing.  For us all associated with the wider building industry, we need to see consumer confidence, so it could be argued that a period of deflation will make the individual feel more wealthy and be prepared to spend.

Construction as a whole accounts for some 6% of the UK economy and is therefore valuable, not just to us within the industry but the country as a whole. The more the government can do to help our sector, the better it will be for all.