UK inflation reaches 6.2%; highest level in 30 years

With the annual headline CPI inflation increasing to 6.2% in February 2022 from 5.5% in January, prices have increased by their highest levels in three decades in the U.K. The spiraling inflationary pressure was driven up by rising gas, petrol, diesel, and electricity prices. Clothing, footwear, furniture, and flooring have also increased.

This increase in the consumer prices index took the measure of inflation to the highest rate since March 1992, when it stood at 7.1%. On a monthly basis, Consumer price index (CPI) inflation was 0.8%, exceeding expectations for a 0.6% rise. This marks the largest monthly CPI increase between January and February since 2009.

Chancellor of the Exchequer Rishi Sunak will announce his tax and spending update to the House of Commons on Wednesday afternoon. He is expected to announce measures to help people with the cost of living. Labour has also called for plans to increase national insurance contributions to be scrapped.

Why is 30-year high on inflation significant?

Money loses value when its purchasing power falls. Since inflation is a rise in the level of prices, the amount of goods and services a given amount of money can buy falls with inflation. Just as inflation reduces the value of money, it reduces the value of future claims on money.

There are major factors at play including:

  • Printing of money – government stimulus packages during COVID increased the flow of money into the economy.
  • Supply chain issues – certain pandemic-induced supply chain pressures are still rumbling on.
  • Russia-Ukraine war – slowdown of grain/oil/wheat/fertiliser. This is exacerbated as the war is likely to go on for a very long time without resolution.

What does all this mean for you as an investor?

Since the early 1980s, bank interest rates have steadily declined, while inflation has skyrocketed. With the current rock-bottom interest rates offered by the major banks and with the high inflation rates making things progressively more expensive, investment-wise, it means that your money is worth less and less every year. As a result, living standards drop. It is imperative that you seek monetary growth to keep pace with inflation.

Therefore, bank accounts should be used for immediate expenditure (six months).

Excess cash in your bank accounts will lead to losses in real wealth value.

What can we offer?

The deVere Group offers a selection of fixed income options that are designed to help savers beat inflation and enjoy capital growth. These products, which are only available for deVere clients, yield between 4 and 25% per annum.

deVere clients who use these products enjoy quarterly, semi-annual, or annual interest payments. These are paid into the client’s cash accounts where they can be withdrawn, reinvested, or held in cash. They offer the ability to earn returns in flat, rising or slightly falling market conditions.

You may click on this link if you wish to join our exclusive client base who are benefitting from higher rates of interest.

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© 2010 – 2022 deVere Group. All rights reserved.

© 2010 – 2022 deVere Group. All rights reserved.

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