UK inflation continues to fall
01 February 2012 at 21:19
According to the Office for National Statistics, the Consumer Price Index for December 2011 fell to 4.2 per cent from 4.8 per cent in November, and was a full percentage point down from the 20-year high of 5.2 per cent in September.
The largest downward pressures to the change in RPI annual inflation between November and December 2011 came from petrol, gas, oil and other fuels, clothing and footwear.
The trend was welcomed by independent financial advisers (IFAs), some of whom have been struggling to provide real term returns for their clients.
Danny Cox, a chartered financial planner and head of advice at Hargreaves Lansdown, said that it is no more important than ever, that incomes are linked to changes in inflation.
"The fewer investable assets, the more important it is that the pension is index-linked," he told the Financial Times Adviser.
Mr Cox added that the rate if inflation may drop further by a percentage point next month, as last year's VAT introduction is factored out.
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