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The Credit Cruncher was conceived to help you to keep up to date with credit crunch and recession developments, it provides some helpful credit crunch advice and it addresses personal debt. The Credit Cruncher also seeks to explain how the credit crunch started and shed some light on the worldwide recession. Recently, we have begun to look at how BREXIT will affect the UK economy. Please feel free to leave comments where relevant.

12 Sep 2008

Are price rises down to the credit crunch?

There is no obvious reason why the credit crunch would have an impact on specific products in high street shops, the credit crunch itself is concerned only with the lending market.
Everything naturally becomes more expensive when fuel goes up, and we are certainly experiencing almost unprecedented hikes in oil prices (not related to the credit crunch). Everything in the shops has had an element of transport (except maybe a farm shop...)
There will be transport costs incurred in getting the materials to the manufacturers and the products to the retailer. The retailer is paying more for fuel to get to work, for the lighting and heating in the shop and that increase has to be covered somewhere - either they make less profit or they pass the costs on.
On the other hand consider this:
the second-hand market is set to boom, eBay will be where many people will defy the credit crunch, buy the things they want at rock-bottom prices and cash in on their old stuff they don't want. So prices could drop if the second-hand market starts to effect sales of new products.
Retail Sales Events will become more frequent as middle of the market suppliers find it more difficult to shift their goods, (Often the very top end and the cheap end are untouched by a financial crisis in most markets) so there is a good news bad news scenario.
My prediction is that the leanest businesses will survive the credit crunch, so I estimate that there will be a lot of cut-price sales going on to keep revenue rolling into the shops, and then there will be a good number of sales where the owners will be sadly going out of business...

2 comments:

Ross Taylor said...

Another great post Credit Cruncher. I myself am considering an experiment where I don't buy anything new (except food and fuel etc) for the whole of 2009.

jay said...

Wow, that would be quite an achievement... When I am determined NOT to spend anything, I deliberately leave all cash and credit cards at home.. Of course if everyone did this, the economy would experience some very serious effects.