Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
Quick links:
  • Home
  • The Actuary Issues
  • September 2017
09

Inflation rises again but long-term pressures remain absent

Open-access content 12th September 2017

Consumer price inflation in the UK increased to 2.9% in August after falling to 2.6% June and stabalising in July, according to figures released by the Office for National Statistics today.

2

This is now the joint highest rate in more than five years, with rising prices for clothing and motor fuels the main contributors to the latest increase.

Inflation rose in both Britain and the EU overall, with increasing global commodity prices thought to be partly responsible, although the UK rate is higher than in all the larger western European nations.

However, Hargreaves Lansdown senior economist, Ben Brettell, believes that demographic changes could mean today's rate may be the highest we see in the current cycle.

"Baby boomers are retiring in their droves," he said. "They have already gone through their consumption phase - they have bought their houses, cars and consumer goods."

"The generation behind them is saddled with debt and struggling to get on the housing ladder. All in all, I see more deflationary forces than inflationary in the world economy at present."

He went on to say that this is likely to mean the Bank of England will keep interest rates on hold at a meeting later this week, allowing them to "remove the sticking plaster of ultra-low interest rates as slowly as they like".

It is instead next month's inflationary figures that will be of most interest to pensioners, according to Barnett Waddingham senior consultant, Malcolm McLean.

He explains that the September numbers used to determine the annual increases in pension and benefit levels are likely to exceed both wage inflation, currently running at 2.1%, and the 2.5% underpin used for the triple lock.

"It is also interesting to note that the Retail Prices Index (RPI) 12-month rate in August 2017 was 3.9% - good news for members of occupational schemes with RPI 'hard-wired' into their scheme rules and those people with annuities providing RPI-based increases," he added.

Many will now be looking to tomorrow's labour market data on wage growth, which is expected to climb to 2.2%, meaning that real wages are still shrinking, and inevitably raising further questions about the cost of living squeeze.


Sign up to our free newsletter here and receive a weekly roundup of news concerning the actuarial profession

This article appeared in our September 2017 issue of The Actuary.
Click here to view this issue
Filed in:
09
Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Reinsurance Pricing Lead

England, London
£40000 - £75000 per annum
Reference
118905

Senior Pricing Actuary

London, England
£60000 - £110000 per annum
Reference
118904

Pricing Actuary (Casualty)

England, London
£60000 - £80000 per annum
Reference
118903
See all jobs »
 
 
 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2020 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited, Level 5, 78 Chamber Street, London, E1 8BL. Tel: 020 7880 6200