Inflation Increase Affect

Published / Last Updated on 27/03/2017

Inflation Increase Affect.

Latest figures from the Office for National Statistics (ONS) has found that inflation has crashed over the Government target trend growth rate (2.0% pa) to hit 2.3% pa in February.

In January, inflation stood at 1.8% pa in January and has jumped by 0.5% pa, to 2.3% pa, its highest in nearly 4 years.

This has been fuelled by food and fuel prices increases, driven fundamentally by a weak pound.

The Brexit effect is taking hold.  The pound has weakened to a point where it is starting to affect our pockets and expected price rises are now starting the filter through.

What to expect? How will inflation affect my money?

  • Apart from the obvious in terms of prices rises, expect:
  • Increased speculation that the Bank of England may have to increase interest rates
  • This will make the pound stronger
  • This will probably cause falls in the UK FTSE 100 index affecting your pensions and investments.

A slightly stronger pound will reduce the profits of large British companies that earn their profits overseas in dollars and euros meaning that when profits are converted back to sterling, they are lower.  This is why the stockmarket will fall.

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