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Households feel the pinch as UK inflation rises above expectations

16 May 2017

UK inflation came in ahead of market expectations at 2.7 per cent in April, versus an expected 2.6 per cent, the Office for National Statistics announced today.

James Andrews, head of investment management at investment management and stockbroking firm Redmayne-Bentley, said: “Higher air fares, electricity and clothing prices drove the increase, as we continue to see the impact of the fall in Sterling post the Brexit vote flow through into prices, as forward contracts expire and hedging rolls off. This marks a key inflection point as wage rises, currently running at around 2.3 per cent, fail to keep up with inflation, meaning households see a squeeze on their finances.

“Whilst the pound has rebounded a little, the US is still talking of further rate rises this year. The Euro is performing again post the French presidential elections, and therefore we could see further softness in the pound later this year as the Brexit negotiation rhetoric steps up on both sides. If we do see further Sterling weakness, then we expect to see further inflationary pressures reducing real wages. This continues to make us fairly pessimistic on the UK consumer, given the reduction in spending power, and adds weight to the Bank of England’s recent warnings on subdued UK growth expectations in the second half of this year.”

Notes to the Editor

Established in 1875, Redmayne-Bentley is one the UK’s largest independently owned investment management and private client stockbroking firms, with 37 regional offices throughout the UK and in the Republic of Ireland.

Redmayne-Bentley has experienced commentators available for comment on personal finance and stock market issues.

Contact:
Ruth Peterson
PR Executive
Email: ruth.peterson@redmayne.co.uk
Tel: 0113 200 6476

Branch: Leeds (Head Office)

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