Kate Smith, Head of Pensions, comments: “After remaining unchanged for the previous two months, the drop in the inflation rate to 2.3%, the lowest for the year, means we are edging closer to the Bank of England’s target of 2%. With inflation falling and the annual nominal wage growth rising to 3.3% for the three months to October, households will begin to feel an ease in the cost of living, a welcomed festive bonus at this time of year where disposable incomes are at their most stretched.
“While it’s always tempting to spend the ‘extra’ income at the end of the month, if earnings continue to outpace inflation at the current rate, individuals should look to save any increase on a regular basis as it could make a big different to their longer terms savings.”
Simeon Willis, CIO, XPS Pensions Group: “Inflation has been bumpy over the last 12 months. We started the year with Mark Carney having to explain to the Chancellor why the CPI rate was 1% over target - with sterling depreciation being the main reason. CPI has subsequently fallen although not making it as low as the 2% target.
“The figure for November shows signs of stabilising, but the path of inflation over the next few months will be heavily influenced by the path of Brexit.
“However, of greater importance to pension schemes is long term inflation expectations which have risen only marginally over the year, despite all the uncertainty of Brexit.”
CPI for November 2018
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