Shoppers and traders in Bournemouth say they are bracing themselves for a thrifty Christmas and an austere New Year.
Increased inflation and the prospect of a VAT hike to 20p in the pound in the New Year have taken the edge off the festive spirit for some people.
Nigel Hedges, President of Bournemouth Trade and Commerce, said: “I don’t think anyone knows what they’re doing.
“If inflation gets out of hand, we have a serious problem. The VAT increase is the most overriding point – do prices go up or down?” he added.
The latest figures on inflation are based on November’s figures and they show a rise in consumer price inflation of 0.1% to 3.3% and in the retail price index rose of 4.5% to 4.7%.
As the figures were released Andrew Sentance, from the Bank of England’s Monetary Policy Committee, warned this was “just the beginning”.
VAT is also set to rise from 17.5% to 20% from January 4th.
But after two years of budgeting in a recession people in Bournemouth don’t feel that inflation has directly affected their Christmas shopping. But there are concerns about the VAT rise in January.
Alison Lowton, 28, who works in sales, said: “Things are going to be a bit tight but in this current economic climate we have to face a VAT rise, so it’s better just to accept it.”
Another shopper, Collier, 59, said: “All my friends and family are cutting back. The VAT increase does worry me, particularly the price of petrol. Also supermarket food prices are going up and up and up.”
Fuel costs are of particular concern with petrol prices in Bournemouth amongst the highest in southern England. The BP garage at Spur End in Castle Lane East was charging 148.9p last month for Ultimate Unleaded Petrol.