Dean Butler, Managing Director for Retail Direct at Standard Life, part of Phoenix Group, said: “July’s inflation data shows that price pressures remain stubborn, and this month the long-awaited return of Oasis looks to be a contributing factor – they’ve been driving up hospitality prices in the cities hosting their gigs. We can’t blame the Gallaghers for everything, however, with food and air fares continuing to impact the headline rate of inflation. These figures come in the context of a divided Bank of England – the Bank needed a second round of voting to cut interest rates by 0.25% on 7th August – and with CPI forecast to rise as high as 4% in September, it looks likely extreme caution will be applied before any further cuts. For borrowers, this could mean costs are higher for longer, particularly for mortgage holders and those with other forms of debt. On the other hand, savers could benefit, with some best buy easy-access savings accounts still offering an inflation-beating rate. Crucially, there’s a wide variation, so it’s worth shopping around. With inflation creeping up, any cash gains are still likely to be marginal in real terms – those willing and able to accept an element of risk could consider investing for a better chance of substantial returns above inflation, perhaps through a tax efficient product like a stocks and shares ISA or, taking a longer-term view, a pension.”
Nicholas Hyett, Investment Manager, Wealth Club: "Rising air fares and higher restaurant and hotels costs are making 2025 an eye wateringly expensive summer. Air fares in particular rose 30.2% month-on-month, the biggest single month rise since records began. True some of that is down to timing, but airlines have been talking about a capacity crunch for a while now, and higher costs are the inevitable outcome. More concerning from a social and economic perspective is the continued rise in food prices, up 4.5% year-on-year and the fourth consecutive increase in the annual rate. Coming on top of the run-away food price inflation seen in 2022 and 2023 that will be very painful for consumers. Rising food and beverage prices together with rising housing costs will be decimating disposable incomes. All this leaves the policymakers with a bit of a conundrum. The most recent interest rate cut was made despite the expectation that inflation would hit 4% in September - which now looks increasingly likely. But with the labour market slowing, the risk of stagflation is very real. If the UK is heading towards the economic "worst of all worlds", it’s not clear what the central bank or the government should do about it.”
Helen Morrissey, head of retirement analysis, Hargreaves Lansdown: “We are heading into an important time for pensioners with data points released in the coming months being used to determine next year’s rise in state pension. Under the triple lock, the state pension increases by whichever is highest of 2.5%, CPI inflation or average wages. The all-important inflation figure used will be September’s (released in October) but we can see it is on the rise with the Bank of England expecting it to hit 4% in the coming months. However, it’s also worth saying that as it currently stands, average wages including bonuses are rising at 4.6%. The figure to be used in the triple lock calculation will be published next month. It has been drifting down, but it seems likely we will see a state pension increase somewhere in the 4-4.5% ballpark for next year. This would give someone on a new state pension an uplift somewhere around £479-538 per year. Someone on a full basic state pension would see that portion of their income rise by between £367-£413. These increases would be much smaller than the huge boosts we’ve seen in recent years, but they will be welcome nonetheless. The increase won’t be implemented until April 2026 and it’s to be hoped that inflation will have dipped significantly by that point so it should give a bit more breathing space to pensioner budgets that have been sorely stretched.”
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