9:56am
What lower than expected inflation means for retirees
The path for inflation looks uncertain and while we’ve seen a dip this month, there’s no telling what the future might hold. This can have huge impacts on pensioner budgets. State pensions are increased every year in line with the triple lock and final salary pensions also increase every year, but for those taking an income from a defined contribution pension managing inflation longer term is a key factor.
8:54am
UK inflation undershoots forecasts
UK inflation fell more than expected to 2.8% in April, below forecasts of 3%. Some temporary factors helped pull the number down – including changes to the Ofgem price cap and the timing of Easter. Even so, combined with a softening labour market, this gives the Bank of England a bit more breathing space.
It’s worth remembering that before the escalation in tensions between the US, Iran and Israel, investors had been expecting two rate cuts this year. Markets are now leaning towards the possibility of one or two rises instead. However, Bank of England Deputy Governor Sarah Breeden struck a more measured tone in the Financial Times this week, emphasising that the Bank’s role is to create a “stable environment” rather than act in a “trigger-happy” way. As she put it: “We don’t need to rush… we’re in a good place to be able to watch what’s happening in the economy.”
Any progress towards a Middle East deal will be critical in easing price pressures. These pressures are already having severe consequences for poorer nations, with reports of shortages and unrest from Kenya to Malawi. Gulf states, along with China and India, are increasing pressure on the US to help broker a resolution. At the same time, there are signs that some countries are becoming more willing to test the situation. A South Korean oil tanker, The Universal Winner, is currently attempting to transit the Strait carrying Kuwaiti oil, following two Chinese vessels that are believed to have already made the journey.