UK inflation rises to 9.1%: What are the experts saying?

Scottish Friendly savings specialist, Kevin Brown, comments:

“As expected, inflation has risen again, despite a multitude of consecutive interest rate rises. The writing has been on the wall for some time now, with inflation still yet to peak.

“One of the biggest drivers of inflation continues to be energy price rises. This is counterintuitive because our energy costs are supposed to fall over the summer months as households turn the heating down, but that is not to be this year. Indeed, the latest predictions are pointing to another 50% rise in the price cap this Autumn, taking energy bills over an astonishing £3,000 a year for a typical household [1]. The cap, remember, was still at just £1,277 in March.

“Talk of a wage-price spiral seems a little optimistic at this point considering wages are falling 2.3% in real terms. Households are finding the situation more and more difficult to manage. The difference between private and public sector earnings is even more considerable with public sector pay falling 7.6% vs 1.1% for private sector.

“Savers are caught in the tide for the same reasons, with top cash savings rates miles behind inflation and devaluing wealth at one of the fastest paces in the last 50 years. The gulf between interest rates and inflation hasn’t been this profound since the early 1970s. Anyone looking to save for the long-term needs to think carefully before leaving wealth languishing in cash.”

James Lynch, Fixed Income Manager at Aegon Asset Management:

“Fears of a continuation of UK inflation surprising to the upside did not materialise today. Yes, headline has moved from 9% to 9.1%, but core inflation FELL from 6.2% to 5.9% which is a better gauge of underlying domestic inflation. So that is 2 months in a row that if you squint hard enough, we can see what almost seemed an exponential rise in prices starting to tail off. Whether this is ‘the peak’ or not I’m afraid we do not know and is down to the energy markets.

“For the BoE, probably a bit of something for everyone. Yes we can point to details of the print being slightly softer but at an eye watering high starting point of 9.1% CPI. We have been guided by the MPC members to look at the persistence of inflation and putting more emphasis on wage/ employment data on the 19^th July.”

Bernie Hickman, CEO, Legal & General Retail, says:

“Today’s announcement that inflation has hit a forty-year high, jumping to 9.1%, raises concerns for households who are struggling to meet increasing food and energy costs. Understanding the impact of inflation is crucial to understanding how much money you have in real terms.

“Many savers who keep their money in a current account or low-interest paying savings account could be seeing its value take a hit. Legal & General research found that half of all cash savers (52%) don’t know what impact inflation will have on the real value of their cash savings over time. It’s important people take the time to understand the impact of inflation increases and consider where they keep their money.”