You are here: Home - Household Bills - News -

Inflation picks up to 0.7%

0
Written by: Emma Lunn
18/11/2020
Higher clothes and food costs have contributed to a larger than expected increase in the rate of inflation.

The Consumer Prices Index (CPI) 12-month rate was 0.7% in October 2020, up from 0.5% in September, according to figures from the Office for National Statistics (ONS).

Clothing, food, furniture, furnishings and carpets made the largest upward contributions (with the contribution from these three groups totalling 0.16 percentage points) to the change in the CPIH 12-month inflation rate between September and October 2020.

These were partially offset by downward contributions of 0.06 and 0.04 percentage points, respectively, from the recreation and culture, and transport groups. The cost of energy and holidays also fell.

Analysts had expected the rate to remain flat at 0.5% as the economy continues to be affected by lockdown restrictions due to coronavirus.

Jonathan Athow, ONS deputy statistician, said: “The rate of inflation increased slightly as clothing prices grew, returning to their normal seasonal pattern after the disruption this year. The cost of food also nudged up, while second-hand cars and computer games also all saw price rises. These were partially offset by falls in the cost of energy and holidays.”

Rachel Winter, associate investment director at Killik & Co, said: “The tiered restrictions in October led to a fall in consumer spending. Although inflation has managed to rise, it remains at a very low level. As we make our way through this second lockdown, we wait to see if we’ll have limitations on the public lifted or are told to revert back to region-specific restrictions.

“Either way, we’ll continue to see the impact on inflation figures of people being told to stay at home throughout November, advised not to travel and non-essential shops shut down once again.”

The surprise jump in inflation will also have a big impact on savers suffering from record low interest rates, especially for those with substantial amounts in cash savings.

Adrian Lowcock, head of personal investing at Willis Owen, said: “The outlook is also tough, and people should be prepared for a potential rise in inflation over the medium and long-term as fiscal stimulus replaces lockdowns.

“With banks, and even NS&I products, effectively paying zero on any cash savings products now, what we can’t get away from is the fact that inflation will be eroding the value of savers’ wealth if they leave it in cash.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Flight cancelled or delayed? Your rights explained

With no sign of the problems in UK aviation easing over the peak summer period, many will worry whether holida...

Rail strikes: Your travel and refund rights

Thousands of railway workers will strike across three days this week, grinding much of the transport system to...

How your monthly bills could rise as the base rate reaches 1.25%

The Bank of England has raised the base rate to 1.25% as predicted – the fifth consecutive rise in just six ...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week