Rate of inflation dips in October

Rate of inflation dips in October

The inflation rate rose 0.9% in the year to October 2016 – a 0.1 percentage point fall from the 1% recorded in the year to September.

In data released by the Office of National Statistics, it was found that the main contributors to the fall in the rate of inflation were clothing, university tuition fees, games, toys, overnight hotel stays and non-alcoholic beverages.

Conversely, inflation faced upward pressure from the rising prices in motor fuels, and from furniture and furnishings, which fell by less than they did a year ago.

Tom Stevenson, investment director for personal investing at Fidelity International, commented: “Higher inflation means the pound in your pocket won’t stretch as far and many will be thinking how they can make their money work harder.

“There is little evidence so far that rising inflation will translate into higher interest rates, so anyone with savings still sitting in cash will struggle to generate real returns.

“To stand any chance of achieving an inflation-adjusted real return, they’ll need to look further up the risk spectrum, investing in bonds issued by companies rather than the government or moving into stocks and shares.”

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