Commenting on the latest ONS inflation data, Kevin Brown, savings expert at financial mutual Scottish Friendly, says
“Another rise in inflation today suggests the UK economy could face a tougher test. So far this year, it has stood strong despite rising energy costs and geopolitical tensions. The UK economy has so far this year stood strong in the face of rising energy costs and geopolitical tensions. Another rise in inflation today, however, suggests that resoluteness could soon be put even further through its paces(1).
“The worry is that the longer the Middle East conflict continues, the greater the risk that elevated energy and fuel costs feed through into the price of other everyday goods and services (2), placing even more pressure on household budgets going into the winter.
“Today's figures will strengthen the hand of Bank of England policymakers arguing for higher interest rates when they meet in November (3). The difficulty there is that raising borrowing costs risks putting further pressure on consumers, without directly addressing the global energy prices driving much of the inflationary concern.
“That leaves households potentially stretched by both rising everyday expenses and the prospect of higher mortgage and borrowing costs.
“For consumers, making sure savings are earning a competitive return after inflation, building a financial buffer where possible, and considering longer-term investing when it makes sense to do so remain sensible ways to help protect their finances.”