Dean Butler, Managing Director for Retail Direct at Standard Life, part of Phoenix Group, said: “While the weather’s been picking up, inflation has been cooling down, falling to 2.6% in March. Unfortunately, this might be the last of the good news, as the impact of a tumultuous April kicks in next month – energy price rises and other bill increases combined with the impact of tariff turmoil all look set to make their mark. While these economic conditions are still evolving, markets are still anticipating a cut to the base rate at next month’s MPC meeting. While this will be welcomed by borrowers and mortgage holders, it will mean lower interest rates for savers. With the possibility of inflation rising once April price rises are factored in, shopping around for the best rates remains crucial in order to avoid losing returns on savings. For those more comfortable with taking on risk, investing can provide the potential for higher long-term returns and, if your finances allow, you might be in a position to take advantage of the current lower market prices, though investing comes with no guarantees. Irrespective of market conditions, pensions remain one of the most tax-efficient ways to save, combining benefits of possible investment growth, employer contributions and tax efficiency making them a compelling option for long-term savers.”
Lily Megson, Policy Director at My Pension Expert said: “A second straight decline in inflation is good news, not just for everyday budgets, but for long-term financial planning too. Of course, broader uncertainty hasn’t gone away – US tariffs are continuing to irritate global markets. That said, slowing price growth is exactly what’s needed to help people rebuild their savings. It could also create the conditions for the Bank of England to consider easing interest rates later this year, presenting fresh opportunities to reassess financial plans. While it makes sense for savers to review their plans and consider the opportunities available, it’s important to avoid knee-jerk reactions that could undermine your financial goals. The key is to stay informed, stay calm, and seek regulated financial advice if you’re unsure. A steady, well-considered approach will always serve better than acting on short-term noise"
Jonathan Moyes, Head of Investment Research, Wealth Club: "This was a slightly softer month for inflation than expected, coming in 0.1% below expectations at 2.6%. This likely gives the Bank of England the green light to cut interest rates in its May meeting. The UK economy is not out of the woods yet. There is a long and swinging road to reach the Bank’s 2% target. Services inflation remains stubbornly high, largely due to higher housing costs (higher rents and council tax). The rise in the energy price cap is also set to see inflation jump in April. Whisper it quietly though, were it not for a global trade war, the UK consumer would be in excellent shape. Wage growth is running at 5.6%, a further three interest rate cuts this year will drive mortgage rates lower, food inflation is slowing, as is eating out and travel. Plus with the oil price in the low 60s, energy prices look to have peaked. If the UK can escape the worst of the global trade war, it might not all be doom and gloom for the UK consumer this year, and we haven’t said that for a while.”
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