• CPI inflation jumps to 1% in July from 0.6%
• Fuel prices, clothing, hairdressers and dental costs all rise
• Savers have just one option to beat inflation
Laura Suter, personal finance analyst at investment platform AJ Bell, comments:
“Despite the Bank of England predicting inflation would fall to near zero this year as a result of COVID-19, the rate has leapt this summer from 0.6% in June to 1% in July. Rising fuel prices, following the oil price slump earlier this year, have helped to push prices up.
“What’s more, the lack of summer sales on the high street mean that clothing and footwear is less discounted than it was last summer, helping to push up prices in comparison to last year. Lockdown and the current pandemic has trampled over the usual seasons that clothing shops operate under, affecting prices. The cost of haircuts has risen as the public rushed to re-opening salons to get their lockdown hair fixed, with the cost of the additional PPE and a reduction in customers to respect social distancing likely to have driven much of the price rises.
“Other factors that helped to push prices up were a small increase in the cost of private dental and physiotherapy services, as people emerged from lockdown and urgently needed to see medical experts. There was also a small increase in the cost of booze, after pubs re-opened and people went out more to enjoy the hot weather.
“The rise in inflation is another blow for savers who have been hit with successive cuts to interest rates since the start of the year. The only saving grace was that inflation was lower, meaning that getting a real return on their money was at least possible with the top-paying accounts. Now just one easy-access account pays more than inflation, NS&I’s Income Bonds, and that is only open to those with £500 or more to save.”
