So, there are plenty of signs that monetary tightening is taking some steam out of the UK economy. Rising interest rates are also taking their toll on the jobs market - the unemployment rate jumped from 4% to 4.2%. This is still considerably above the Bank's 2% target, but it is moving in the right direction. The inflation rate is falling, and figures released tomorrow will likely show that it fell again in June - from 7.9% to 6.7%. It's a tough call for policymakers because even though wages are still rising robustly (helped in part by the big one-off pay rise to millions of NHS workers) there are signs that the economy is weakening. The Bank has raised interest rates for 14 consecutive months and the full impact of those rate rises is still working its way through the economy. Renters are also likely to feel the pain as landlords try to pass on higher mortgage costs. That's bad news for anyone rolling off a fixed rate mortgage or sitting on a variable or tracker deal. Financial markets now expect the base rate to peak at 6% - up from 5.75% last week. ![]() The Bank is likely to raise rates from 5.25% to 5.5% in September but more rate rises will probably follow. It means they are even more likely to raise interest rates again at the next monetary policy committee meeting on 21 September. Policymakers have been keeping a close eye on wage growth because they fear that robust pay rises could fuel inflation. That should give ordinary households something to celebrate but it will cause consternation at the Bank of England. It means our living standards are no longer taking the battering they once were. Wages are rising at a record pace and are on the cusp of outpacing inflation. Today's labour market figures are a double-edged sword. The insurance coverage amount may change based on the business's needs, but the premium amount will remain fixed.By Gurpreet Narwan, business correspondent Insuranceįor example, a business that pays $1,000 monthly for liability insurance will have to pay that amount regardless of how much they produce or sell. For instance, if a business has salaried employees who earn $4,000 per month, they will be paid that amount even if the business experiences a slow month in terms of production. The amount of money a business pays its employees each month is typically fixed and does not change based on production or sales. For example, a retail store that pays $5,000 monthly rent will have to pay that amount whether they sell $10,000 or $100,000 worth of products monthly. Rent is a fixed cost that businesses must pay regardless of how much they produce or sell. Fixed Costs ExamplesĮxamples of fixed costs include rent, salaries, insurance and loan payments. Want to know how a firm makes profits after incurring all these costs? Read our article on Revenue vs Profit. Price Determination in a Competitive Market.Market Equilibrium Consumer and Producer Surplus.Determinants of Price Elasticity of Demand.Cross Price Elasticity of Demand Formula.Effects of Taxes and Subsidies on Market Structures. ![]()
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