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Inflation remains negative

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The Consumer Prices Index (CPI) fell by 0.1% in October 2015, according to the Office for National Statistics (ONS).

The Retail Prices Index also fell to 0.7% in October from 0.8% in September, the lowest rate since November 2009.

Costs for clothing and footwear rose by 2.0% between September and October this year, while recreational prices saw an increase by 0.8%, compared to 0.4% last year. However, they were offset by the downward prices of university tuition fees, food (0.4%), alcohol (0.4%) and tobacco (0.4%), resulting in no change to the overall rate of inflation.

John Allan, national chairman for the Federation of Small Businesses (FSB), said:

“While real wage growth has picked up, providing a boost to consumer spending power, small business confidence has slipped recently. The key to keeping the recovery on track is to ensure that confidence levels are maintained.”

David Kern, chief economist at the British Chambers of Commerce (BCC) said:

“Low inflation boosts disposable incomes and supports living standards, which helps to sustain economic growth.”

Ian Forrest, investment research analyst at The Share Centre, explains what the latest set of inflation figures mean for investors.

“Investors should acknowledge that despite this being the weakest spell of inflation in more than 50 years, from November onwards, the market expects to see inflation rise as the impact of last year’s steep fall in the oil price begins to work its way out of official calculations.”

Contact us to discuss how inflation could affect you or your business.