IPSE: Rising inflation is a new concern for freelancers

Tuesday 27 June 2017

As inflation continues to rise, freelancers could be increasingly concerned by the costs of goods and services, the Association of Independent Professionals and the Self Employed (IPSE) has warned. 

The latest data from the Office for National Statistics (ONS) found that Consumer Price Inflation has now reached 2.9 per cent, which is 0.9 per cent more than the Bank of England target. 

According to the findings, one of the main reasons behind the rise is the increasing cost of cultural and recreational goods and services. Other factors include rises in electricity and food prices, which are having a knock-on effect on incomes. 

Lorence Nye, IPSE’s economic policy advisor, said: “There is cause for concern here because wage growth is lagging behind these price increases, putting a squeeze on households across the country. 

“There’s a strong risk that this could reduce consumer spending, which has been one of the biggest drivers behind the UK economy in recent years. So it’s particularly worrying that these price increases are all in consumer-focused areas.”

Mr Nye went on to say that businesses, as well as consumers, will be worried about inflation, highlighting that freelancers have become increasingly concerned about a jump in input costs over the last year. 

Financial management is vital for all start-ups and independent professionals, as they will need to develop a strong understanding of taxation laws that can have a huge impact on their earnings. 

To ensure they do not accidentally break the law and are properly informed about the industry, self-employed individuals should turn to contractor and freelancer accountants. 

These experts have a vast understanding of the financial climate and can provide the assistance required for independent professionals to reach their full potential. 

As well as helping with taxation, these specialists can provide financial assistance on how to budget and forecast accurately. Having these consultants at hand to provide advice could be especially beneficial for general advice. 

However, while IPSE agrees that the inflation jump is concerning, Mr Nye believes the rise was not surprising. 

He urged people not to panic yet and stressed the Bank of England inflation was expected to reach the level by the end of the year, but has come in earlier than anticipated. 

It will be interesting to see if the rate rises further in the near future. For the time being, self-employed professionals should focus on managing their finances as efficiently as possible. 

By Victoria McDonnell

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