Mike Ambery, Retirement Savings Director at Standard Life, part of Phoenix Group, said: “Today’s fall in inflation to 3.6% will no doubt be welcome news for the Chancellor as she finalises next week’s Budget. It suggests the worst of the recent inflation surge is behind us, but persistent price rises for everyday basics like food underlines that we are not out of the woods yet. As the Budget approaches, the focus will be on whether new policies can stimulate economic growth while sustaining this downward trend in inflation and support households through what remains a challenging environment. Budget day should provide some much-needed clarity on the Government’s fiscal priorities for the year ahead. The current environment highlights the importance of staying proactive about personal finances and retirement planning. For those approaching retirement, annuity rates continue to look attractive in the current interest rate environment. However, with rising costs still adding pressure, it’s increasingly important for people to keep track of their spending and ensure their income is keeping pace in real terms. For savers, it’s worth remembering that cash rarely keeps up with inflation over the long term. A diversified, long-term approach – through pensions or investments, as well as easy access ‘rainy day’ cash savings - remains one of the most effective ways to protect and grow the real value of savings, particularly in a world where inflation may take longer to settle back at target.”
George Brown, Senior Economist at Schroders, said: “Evidence inflation has peaked should tip the scales towards a December rate cut. But any further rate cuts will largely depend on the contents of the Chancellor’s red box. If VAT and green levies are eliminated from household energy bills, inflation could fall by as much as half a percentage point. But we remain concerned that broader price pressures will prove persistent. Wage growth is still well above a target-consistent pace, especially given repeatedly weak productivity. The Bank must tread carefully given the heightened risk that high inflation becomes entrenched.”
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