UK inflation has risen to a 22-month high of 1 per cent for September.
James Andrews, Head of Investment Management at investment management and stockbroking firm Redmayne-Bentley, said:
"This is its highest level since 2014 and ahead of consensus estimates of 0.9 per cent, delivering a fairly substantial jump from the previous reading of 0.6 per cent as the fall in the pound takes hold on prices.
“The pound has fallen nearly 20 per cent against the US dollar since the Brexit vote to its lowest level in 168 years. Of that, 6 per cent has come during the last month as the government has set the date for Article 50, and all indications point to a ‘hard’ Brexit. Clothing and footwear saw the biggest increases in prices over the month, as retailers started to pass on the increased cost of their goods to consumers.
“We continue to expect further increases in inflation as forward contracts and currency hedges roll off, leading to additional increases in import costs (the UK is a net importer). Apple put through close to 10% GBP price increases almost immediately post-Brexit, and in recent days we have seen the Unilever/Tesco altercation over Unilever’s attempts to increase its prices, spill over into the public domain. It is very likely that these increases will continue over the next 6 months, should the pound continue to trade at these levels, and the Bank of England seems happy to run the economy a little hot rather than raise rates and put jobs and growth in further jeopardy, so we see no signs of inflation abating any time soon.
“Our portfolios continue to increase their inflation-proofing exposure and we expect a choppy ride for the UK economy over the coming weeks and months.”
Please note, investments and income arising from them can fall as well as rise in value and you may get back less than you originally invested. Past performance and forecasts are not a reliable indicator of future results or performance.
Notes to Editor
Redmayne-Bentley is a national investment management and stockbroking firm with almost 40 branches from the Highlands to the south coast of England, Northern Ireland and the Republic of Ireland.
For all media enquiries and comment, please contact:
Ruth Peterson
Tel: 0113 200 6476
Email: ruth.peterson@redmayne.co.uk