Inflation reaches 2.9% and hits savers where it hurts
The latest Consumer Prices Index stats show that the rate of inflation rose to 2.9% in August 2017. With no savings accounts on the UK market currently meeting this rate, you can almost hear the frustrated groans of savers up and down the country. No wonder so many are turning away from high street banks and looking out for other types of investment to build nest eggs and make retirement pots more viable for a comfortable future. But savers shouldn’t be seduced simply by the highest returns they see advertised – diligent research and diversification into several pots is the best way to protect yourself in case of turbulence ahead.
These latest CPI figures put inflation at its highest rate since June 2013, partly driven by the effect of sterling’s post-referendum drop on the cost of imports, such as clothing, food and petrol. Rising prices continue to leave many households struggling to stretch real incomes to cover basic costs, with some being pushed into unplanned debt to compensate. With inflation 0.3% higher than this time last year, workers continue to face cuts to their yearly income as a result, which has put pressure on the government to review and lift some public sector pay caps.
Many are awaiting the next move from the Bank of England’s monetary policy committee, who previously predicted inflation could hit 3% before coming down again. Last month the committee voted 6 to 2 in favour of an interest rate hold and they’re due to vote again on 14 September.