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Inflation is rising at a snail’s pace; interest rates will too

18 August 2015

12:20 PM

18 August 2015

12:20 PM

With inflation nailed to the floor, real wage increases are now increasing at the fastest rate in years. Today’s CPI inflation data today shows it moving from zero in June to 0.1pc in July – but this masks a 2.7pc reduction in the cost of food. For those on the breadline, it’s a welcome trend: salaries are up, and the cost of groceries is going down. The strong pound means the price of consumer durables is falling faster than anywhere on the continent.

Inflation will pick up, but it will stay low for quite a while according to the Office for Budget responsibility:-

And the effect on interest rates? We’ve heard plenty about their rising, but the City expects they won’t go back to anywhere near pre-crash levels. Good news for borrowers, bad news for savers.


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