According to the Office of National Statistics' (ONS) latest figures the Consumer Prices Index including owner occupier’s housing costs (CPIH) 12-month inflation rate rose in December 2020 to 0.8% pa, following a 0.1% pa fall in November 2020.
The main benchmark for inflation, the Consumer Prices Index (CPI) doubled up to 0.6% pa in December 2020 from 0.3% pa in November 2020.
December’s largest contributor was recreation and culture.
The largest downward contributors were clothing, food, and non-alcoholic beverages.
The old measure of inflation, the Retail Prices Index (RPI) was 0.9% pa in November and has also ticked up 0.3% to 1.2% pa. This is the one was always look to as it includes mortgage housing costs. In addition, many benefits, payrises and pension payment increases are linked to RPI. It is more important than the govenment makes out.
Action point: If CPI is 0.9% pa, RPI 1.2%pa but interest rates on yoru cash savings are at 0.1%pa and with prospects of teh Bank of England setting a first ever negative interest rate, is now the time to think about investing in markets as your cash holdings are going to devalue if you earn 0% or 0.1% pa and RPI is 1.2% pa?