15 February 2023
If you are covering UK inflation for January 2023, please find a comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
“As energy prices retreat, UK inflation has dipped to 10.1% but it is proving to be sticky with the rate of price increases falling by only 1% since October 2022.
“With FTSE 100 recently reaching record highs, investors will be somewhat comforted by the direction of travel for prices. However food prices remain a major driver of UK inflation, continuing their upwards march in January with an eye-watering 16.8% increase. Food industry bosses have warned that prices will take considerable time to come down.
“This week’s job’s data is also a contributor, with growth in average regular pay rising to an annual rate of 6.7% in the final three months of 2022, up from 6.5 per cent in the three months to November, which adds to the inflationary spiral. The cocktail of a tight labour market and inflation failing to cool off quickly will remain a cause of concern for Bank of England policymakers, which may mean the Bank’s aggressive strategy stays in place.
“For savers, it is important to remember that while inflation is slowly decreasing, it remains high meaning cash savings are likely to be rapidly eroded in real terms. While cash savings are important to have to fall back on should you need it, where possible people should consider investing for the longer term to have a better chance of growing their money rather than seeing their savings being depleted.”
