Surprise fall in inflation to 1.7%
The figure is an important psychological milestone ahead of what’s tipped to be a tough Budget for personal finances.
16th October 2024 09:57
by Myron Jobson from interactive investor
Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “The surprise fall in inflation below the Bank of England’s target level is an important psychological milestone for both Britons and policymakers ahead of what is tipped to be a tough Budget for personal finances.
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“The pace of price rises hasn’t been this low since the days of Covid lockdowns. It is important to remember that inflation doesn’t slow in a straight line. Inflation is likely to rise again with household energy increasing by 10% at the start of the month. However, the overall trend in inflation is certainly one of slowing and suggests that high inflation has been well and truly tamed.
“September’s inflation figure means that millions of Britons on benefits, like Universal Credit, are poised to see a 1.7% increase in the payments they receive in the next tax year to keep pace with inflation. This is conspicuously less than the expected 4.1% rise in the State Pension, under the triple lock pledge. This lays bare the fact that personal finances are exactly that — personal. As such, it remains important to budget effectively and have enough money squirrelled away in a rainy day fund — between three and six months’ worth of salary is a good rule of thumb — to maintain financial resilience.
“The latest set of inflation numbers also puts pressure on the Bank of England to cut borrowing rates at its meeting next month, which could result in cheaper mortgage rates, although the opposite is likely for savings rates."
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