UK INFLATION fell for the second month in a row but pressures remain on savers, investors and businesses.
Official for National Statistics (ONS) data, released on Wednesday, showed that the consumer prices index (CPI) grew by 2.5 per cent in March, down slightly from the 2.7 per cent reported in February, but still above the Bank of England’s two per cent target.
However, commentators warned that the squeeze would remain on personal finances while savers would need to look hard for meaningful returns.
“Despite inflation continuing to fall for the second consecutive month, it still remains high, putting pressure on finances,” said Giles Cross, chief executive at peer-to-peer business lender Folk2Folk.
“So much so, that recent ONS statistics revealed disposable income has fallen for the first time in six years.
“While the next Bank of England rate rise is imminent, many are still questioning whether consumers will actually see any benefit, particularly as several of the banks failed to pass on the rise from late last year.
“Those wanting a positive return on their money in real terms will need to look at alternative avenues and now at the start of a new tax year, there has never been a better time to maximise any money that people can afford to put away.
“The extension of ISA limits and the introduction of new products such as the Innovative Finance ISA (IFISA) can provide attractive tax-free interest on investments. There are options to fit everyone’s needs.”
CPIH, a measure which includes housing costs – and which the ONS cites as a more useful indicator of living costs than CPI – was 2.3 per cent, down from 2.5 per cent last month.
“Despite inflation slowing, businesses are facing a raft of challenges including rising costs, Brexit uncertainty and a potential interest rate rise on the horizon,” said Samantha Seaton, chief executive of Moneyhub.
“To navigate the choppy waters ahead, UK businesses should make sure that they’ve got their finances under control.”