The latest figures show the consumer price index measure of inflation rising to 4.2% in October from 3.1% in September. Commenting on today’s figures, Sarah Pennells, Consumer Finance Specialist at Royal London says:
“This leap in inflation confirms what many households have already felt in their budgets – that prices are rising sharply. The main driver behind the rise was an increase in energy bills and fuel costs, which will come as a surprise to no-one. However, we haven’t experienced inflation at this level for almost a decade.
“Last month, the Office for Budget Responsibility predicted that inflation would reach four per cent, on average, throughout next year, peaking at around five per cent - so rising prices are here to stay for some time.
“People with money in savings will find their value eroded a little faster by inflation, as the best buy easy access accounts are currently paying less than one per cent. Even the best buy five-year fixed rate bonds only pay around two per cent. However, if the Bank of England raises interest rates next month, we should see savings rates start to edge up, although banks will not necessarily raise rates by the same amount or at the same time.
“There’s also a big gap between today’s consumer price index figure of 4.2% and September’s inflation rate of 3.1%, which many benefits, including the state pension, will be uprated by next April.”