You are here: Home - Saving & Banking - News -

Blow to households as inflation hits six-month high

0
Written by:
19/09/2018
Consumer prices unexpectedly jumped to a six-month high in August dealing a blow to squeezed British households.

The Consumer Prices Index (CPI) rose to 2.7% up from 2.5% in July, according to figures from the Office for National Statistics (ONS).

Markets and economists had expected a small drop to 2.4%. But increased costs for recreational and cultural goods and services, transport services and clothing pushed the rate up for the second consecutive month.

Theatre tickets, transport and autumn clothing were the biggest upward contributors.

The latest figures mean that wage growth including bonuses, which is currently at 2.6%, has fallen behind inflation meaning Brits are once again getting progressively poorer in real terms.

Emma-Lou Montgomery, associate director for personal investing at Fidelity International, called the inflation figures “a body blow to UK households.”

Brexit uncertainty

Experts believe Brexit uncertainty could push inflation up further.

“Trade friction could see a material decline in Sterling, raising inflation significantly above current levels and leading to higher wage demands at a time of limited political strength,” said Nick Dixon, investment director at Aegon.

“Such wage pressure could exacerbate inflation and add pressure on the Bank of England to raise interest rates faster and higher than markets anticipate.”

Ben Brettell, senior economist at Hargeaves Lansdown, said: “The numbers reinforce expectations that policymakers will gently lift interest rates over the next couple of years.

“The figures won’t come as welcome news to the Bank of England though – they’ll be desperate to leave policy unchanged until we get some clarity over Brexit, and won’t want to be forced into a rate rise by accelerating prices.

“A rise to 1% is tentatively priced in for around May next year, though clearly a disorderly Brexit would force a dramatic rethink.”

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