The speed worth change has fallen by greater than anticipated

Right here, we clarify the whole lot it’s worthwhile to know concerning the newest inflation stats and which financial savings accounts provide inflation-beating charges. 

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What’s the present fee of inflation within the UK?

The present CPI fee of inflation within the UK is 1.7% for September 2024, in line with the latest figures from the Office for National Statistics (ONS). That’a rather less than the anticipated 1.9%. It was 2.2% in August.

This truly brings the speed all the way down to the bottom we’ve seen in three and a half years.

The present fee of core inflation (which removes extra unstable merchandise like meals and gas) within the UK is 3.2%, down from 3.6% in August. Providers inflation (which has remained greater than the remainder for some time now) fell from 5.6% to 4.9%.

In the meantime, RPI (nonetheless utilized in some instances resembling rail fares, curiosity on scholar loans and air passenger responsibility) within the UK is all the way down to 2.7%. It was 3.5% final month.

Historic inflation charges

The graph beneath reveals how CPI inflation has modified within the UK.


supply: tradingeconomics.com

What’s inflation?

The primary factor to recollect is even when the speed of inflation is falling, costs are nonetheless going up. They’re simply growing by a slower fee.

Take a look at our What are inflation and deflation? article to be taught extra about what worth adjustments depend in direction of inflation, in addition to explanations of the totally different measures together with CPI and RPI.

When is the subsequent inflation announcement?

The following inflation announcement might be on 16 October 2024. 

The ONS publishes inflation figures every month and has confirmed the following dates for upcoming bulletins : 

  • 20 November 2024
  • 18 December 2024
  • 15 January 2025
  • 19 February 2025
  • 26 March 2025
  • 16 April 2025
  • 21 Could 2025
  • 18 June 2025

What’s modified this month?

Most worth will increase slowed down this time, and petrol and airfares truly fell by 10.4%, making worth cheaper. Nevertheless, there was a bigger enhance for meals.

You possibly can see how costs have modified for particular person gadgets in this ONS calculator, whereas this chart reveals the annual CPI charges over 12 months for the final three months.

Aug 2024 Sep 2024
CPI All gadgets 2.2 1.7
Meals and non-alcoholic drinks 1.3 1.9
Alcohol and tobacco 5.8 4.9
Clothes and footwear 1.6 0.8
Housing and family providers -1.6 -1.7
Furnishings and family items -1.3 -1.0
Well being 5.5 5.2
Transport 1.3 -2.2
Communication 4.1 5.2
Recreation and tradition 4.0 3.8
Training 4.5 4.4
Eating places and resorts 4.3 4.1
Miscellaneous items and providers 3.3 3.3
All items -0.9 -1.4
All providers 5.6 4.9
CPI exc meals, power, alcohol and
tobacco (core CPI)		 3.6 3.2
Supply: Client worth inflation from the Workplace for Nationwide Statistics

Will inflation go up or down?

This drop doesn’t imply it’ll hold happening. A number of months in the past, the Financial institution have mentioned they count on it to rise to 2.5% by the tip of the 12 months and be some time earlier than it ranges off on the goal fee of two% over the subsequent few years.

What does it imply for the bottom fee of curiosity?

In September, the Bank of England kept the base rate to 5% (having been reduce in August), an indication that by reaching 2%, issues have been on the mend however

There have been expectations that the speed would fall once more this 12 months, and the shock inflation drop this month signifies that’s now much more prone to happen on the subsequent assembly on 14 November 2024. That may see the speed at 4.75%. The probabilities of one other reduce in December to 4.5% have additionally elevated.

What does it imply for future worth will increase

It’s this month’s CPI which is used for subsequent April’s advantages will increase, which means we all know now how a lot they’ll go up by – although the federal government can select one other determine.

For the State Pension, the ‘triple lock’ means the upper wage development determine of 4.1% might be used.

Listed here are the important thing will increase linked to inflation charges:

  • July RPI – rail fares in March
  • September CPI – advantages together with State Pension in April
  • December CPI – scholar loans in September

Do any financial savings accounts beat inflation?

Regardless of falling financial savings charges, we’re nonetheless at a spot the place there are many choices that beat inflation!

The highest-paying financial savings account is the Principality Building Society Regular Saver which presents 8%, although just for six months. It’s price noting that this can be a “common financial savings account”.

Which means that you’ll have to satisfy sure necessities to maintain the account open and get the complete quantity of curiosity. For instance, depositing as much as a specific amount every month or limits on how a lot you possibly can withdraw. (Some don’t allow withdrawals in any respect.) 

You may also earn 6% with the Santander Edge Saver, in the event you maintain a Santander Edge account. Should you add direct debits (to earn cashback) on the linked present account there’s a month-to-month charge for the present account, so hold that in thoughts when evaluating financial savings charges.

Nevertheless in the event you’re in search of accounts with out these stability restriction, there are now dozens of easy access and fixed rate savings accounts above the inflation rate.

The perfect quick access pays 5%. These enable extra flexibility and you may deposit and withdraw your cash extra freely. And there are discover accounts going as excessive as 5.15%, although it’s a must to give discover earlier than you possibly can entry your money – in order that they’re not as versatile.