Annual rate of inflation rose to 0.7 per cent in October

Darnell Taylor
November 18, 2020

"Inflation-beating rates are still available in the savings market for now, but if the rate of inflation rises as predicted next year, most savers will be losing money in real terms based on today's top rates", explained Rachel Springall, finance expert at Moneyfacts.co.uk.

Inflation numbers in Canada showed prices rose above expectations in October.

Second-hand cars and computer games also saw price rises, but these were partially offset by falls in the cost of energy and holidays.

"The 0.7% outturn in the targeted inflation rate is unlikely to shift the dial much on the likely path for United Kingdom monetary policy over the months ahead".

Statistics Canada says the consumer price index in October was up 0.7 per cent compared with a year ago as the annual pace of inflation increased led by higher food prices.

"Notably, many existing homeowners were spurred on to move by the combination of needing more space and the temporary Stamp Duty changes".

Throughout 2020 this pattern has been different, with increased discounting in March and April, probably as a response to lockdown, it said.

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"A 4.7% increase in house prices, with mortgage approvals at their highest level since 2007, suggests a "mini boom". A one-month lockdown was announced for England at the end of the month and started on November 5.

However, vehicle prices may stabilise and fall back in the middle of 2021 should a vaccine become widely available, according to Samuel Tombs, chief United Kingdom economist for Pantheon Macroeconomics.

BMO chief economist Douglas Porter said there will be a tug of war on prices as businesses balance increasing costs from public health measures while battling depressed demand.

Inflation may have ticked up in October but delve into the figures and you're reminded: it's not the risk of inflation that looms large right now but the opposite. This in itself has presented new challenges to the industry with property portal Zoopla estimating 418,000 sales in the pipeline nationally, 50 per cent more than the typical number for this time of year.

In October, the average of Canada's three measures for core inflation, which are considered better gauges of underlying price pressures and closely tracked by the Bank of Canada, was about 1.8 per cent.

Where some prices are slowly rising, the national lockdown measures now in place can only exert further deflationary pressure. The Bank of England aims to maintain inflation at 2%.

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