We are pleased to see the latest moves to ‘return to normal’ and the view that we are moving into a ‘living with’ Covid. City centre ancillary businesses will no doubt be overjoyed that the work from home edict has been reversed so still some positives there.

However, as our ‘headline’ says, there is also negative news – with the headline inflation rate hitting 5.4% in December - the highest level since 1992. This prompted Andrew Bailey, Governor of the Bank of England to warn that we would facing a cost of living crisis throughout this and next year.

This hike in inflation has been caused not just by increased energy costs but also food costs. With the current price cap due to end on 1 April, households could be facing a significant increase of up to 50% in their energy bills just as National Insurance contributions are due to increase by 1.25%.

What will happen to base rates? Well again there is a lot of talk about further rate rises to come which would obviously put further pressure on household income, but interestingly, when addressing the Treasury Select committee, Andrew did make a comment that pressures on household income does have an impact on demand and so potentially contributes to an easing of inflation. Andrew was at great lengths to stress that this does not mean interest rates will not need to rise again but there is, potentially, a little piece of good news there to hang on to in the short term, but he did mention that, as part of their stress testing, a ‘rates up’ scenario was likely, which has previously used a base rate of 4% for that stress testing.

Also, the latest retail sales figures issued on 21 January, have not helped to keep us positive. Overall sales fell 3.7% in December but non-food items fell by 7.1%. This reduction is being attributed to the Omicron virus keeping shoppers at home but possibly also there might be an element of ‘belt tightening’ following Christmas and with all the talk of pressures on income to come in the next few months. Whatever the reason, these numbers will be causing more worry for retailers who will be hoping that these sales numbers will be reversed with the lifting of restrictions. Whether they do or not we will have to wait and see.

So all in all some good news still out there but with the pressures on household incomes we do, on balance feel that there will be more bad than good to come over the coming months.