🔔 Inflation confounds expectations by remaining static in October

With analysts predicting a rise in the rate of inflation in October, expectations were confounded when an unchanged rate was announced this week.

Experts were expecting the Consumer Prices Index (CPI) rate to rise slightly to 2.50%, from 2.40% in September – but downward contributions from food and clothing costs, offset against rises in fuel costs and domestic gas prices, led to a static CPI rate of 2.40%.

According to the Office for National Statistics (ONS), the largest downward contribution to the CPI rate was in the food and non-alcoholic beverages category for the second month in a row and also the clothing and footwear category, with lower yoghurt, cheese and menswear prices of particular note.

On the flipside, an increase to domestic gas prices and to the cost of petrol and diesel are the largest upward contributions to the overall inflation figure.

So, good news for those keen on dairy, as well as those men overhauling their wardrobe (or having it overhauled for them!) – not such good news for those filling up at the forecourt or turning up the heating as the temperature outside falls!

Of course, the key thing to remember is that inflation is a very personal thing – how and where money is spent varies considerable between individuals and so rising and falling costs can affect some more than others.

So, people keen on cheese but who take the bus or train to work may have even seen their personal inflation rate fall.

The CPI measure should only be viewed as a general indication of the prices of goods and services – only you really know how much your costs are rising and by how much.

However, inflation can be a good overall indicator of how things are going in the wider economy, with one commentator in particular suggesting that, despite no change in the inflation rate, there has been a change in expectations as to when the base rate is likely to rise.

There now seem to be thoughts that a rise in the base rate will come sooner than expected - even as early as May 2019 – though we will have to see how that pans out.

Despite inflation remaining static in October, as best buy savings rates are on the up currently, there are more accounts to choose from that match or beat the CPI rate, compared to last month - as you can see from the table below.

However, you will still need to tie your money up for at least three years to ensure that it is not losing value in real terms.

Take a look at our fixed rate bond and Sharia account best buy tables for more detail on the top rates available.

In addition, there are a handful of interest-paying current accounts and children’s savings accounts that could be used to counteract the effects of inflation - albeit usually for smaller amounts and/or with fewer savers able to access those accounts. 

And thanks to one of our readers, who requested a handy summary of the accounts that beat inflation, which you can find below - keep the suggestions coming!

Despite the lack of change to the rate of inflation this time, as we have seen previously, it often varies from month to month and trying to keep pace with it can be problematic at best.

However, we don’t have to settle for paltry rates – by being active, we can all at least reduce the effect of inflation on our cash savings by choosing the accounts with the best possible interest rates that suit our own specific circumstances.

Take a look at our independent best buy tables or call us on 0800 011 9705 for help finding the most suitable accounts for you.

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