General Insurance Article - Inflation rate remains on Bank of Englands 2 percent target


Following the publication of the Consumer Prices Index (CPI) 12-month rate for June, please see the below comment from Steven Cameron, Pensions Director at Aegon.

 “For the second month in a row, the inflation rate is spot on the Bank of England’s target of 2%. The figure follows labour market statistics which show wages have outpaced inflation for 16 months in a row and real wage growth rose at the fastest rate since October 2015 to 1.7% in May this year*.

 “Although the economy continues to be subdued, the low inflationary environment will be welcomed by households, particularly if wage growth continues to exceed price increases. This will be particularly welcome during the holiday period, although the continued weakness in sterling will offset this for those travelling abroad.

 “If we continue to see prices rising slower than wages then consumers should be in a position where they can start to put any increase in disposable income into a savings pot. It is always tempting to spend any additional income however even an initial increase in saving as little as £30 could mean you have an additional £50k in your savings pot over 40 years
  

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