This is the time of year when UK (excluding Northern Ireland) property owners get their annual council tax demand for the next year. If ever there was a confirmation that inflation is back, it’s this – my council tax for April 2021-April 2022 is up by 4.8% compared to the previous year. One item – for the local police and crime commissioner’s services – has gone up by a whopping 7.4%!

Meanwhile, the government says the Consumer Prices Index (CPI) rose by 0.7% in the 12 months to January this year. The CPIH (which includes owner-occupiers’ housing costs, including council tax) rose by 0.9% in the 12 months to January this year, according to government figures. My council tax went up by 4.99% in 2019-20 and 3.99% in 2020-21. So over three years, this tax has risen by an average 4.59% a year. Across the country council tax this year will go up by an average 6.6%. Yet the government figure for the annual CPIH nationwide in 2019 was 1.4% and 0.8% in December 2020. There seems to be a discrepancy somewhere…

This creeping inflation and stealth tax hits us all; the poorest households hardest. Many have racked up debts during the Covid-19 lockdowns. Total UK household debt in the third quarter of 2020 was almost £1.9 trillion, 2.4% higher year-on-year. It’s difficult to accurately assess how many and what types of people are struggling in the UK – there are so many ways of calculating this. But the increase in foodbank use – up by 88% rise in demand during February-October 2020 compared to the same period in 2019 say independent food bank operators – gives a clue.

Yet at the same time, many UK households have managed to save during the Covid-19 lockdowns. Since March 2020 UK households have accumulated an estimated £125 billion in savings, according to the Bank of England (BoE).

Where will all this unusual savings go? It may well be just as quickly spent once the Covid-19 lockdown ends, although maybe it needs to be saved for rainy days ahead.

For the UK’s Chancellor, Rishi Sunak, has in mind a series of stealth taxes, by de-indexing the tax system. From 2022 through 2026 there will be no adjustments of income, inheritance or capital gains tax brackets, of pension lifetime allowances or of value-added tax (VAT) for small-business thresholds. This de-indexing will see him gather an additional £25 billion in taxes over four years and push 1.3 million new taxpayers onto the tax rolls by 2026 – with the majority at the bottom end.

Like a frog dropped into a saucepan of cool water that is actually being boiled up, a percentage here and a percentage there feels rather painless at the time. All of us facing an inflationary council tax bill will have to grit our teeth and bear it.

Is gold a good hedge against inflation? This debate rages. And opinion is deeply divided about where inflation is headed.

In any case at Glint, we promote gold not purely as a hedge against inflation, but as money, to be bought, spent and used as an alternative to paper money; since 1933 the US dollar has lost more than 90% of its purchasing power. And the amount of dollars in circulation is now 60 times greater than in 1933. Some of you may have more cash around as a result of policy decisions by your government; but holding it as cash or putting it into a bank account may not be the best use of it in these volatile times.

All the best,

Jason