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The rate of monthly change in property values was 0% in October–marking the first time since June 2015 that prices have not increased month on month.
The rate of monthly change in property values was 0% in October–marking the first time since June 2015 that prices have not increased month on month.

UK Inflation Could Quadruple in 2017

The increase in producer price inflation over recent months can be partly attributed to the changes in the sterling exchange rate

UK Inflation Could Quadruple in 2017

UK inflation is set to quadruple to about 4% in the second half of 2017, according to a think tank estimate.

The rise in prices will “accelerate rapidly” during next year due to the fall in sterling, says the National Institute for Economic and Social Research, revising up the figure from 3% it forecast in August, MoneyMarket reported.

It predicted the plunging pound would send inflation shooting up to about 4% in late 2017.

Inflation is the rate of increase in prices for goods and services—so higher inflation would affect consumer spending power.

The last time the UK CPI hit 4% was in 2011.

In September the index rose to 1% jumping to a two year high and up from 0.6% in August, according to the ONS.

The main upward contributors were rising prices for clothing, overnight hotel stays and motor fuel.

Crude oil also pushed up prices increasing 14.2% year-on-year in September, the highest since 2012.

The ONS says the increase in producer price inflation over recent months can be “partly attributed to the changes in the sterling exchange rate”.

The Bank of England will publish its quarterly inflation report on Thursday where it is expected to raise its forecasts for inflation.

NIESR also said that the UK economy will face “significant risks” and that it would expand by 2% in 2016 but would only grow 1.4% next year.

  House Prices

House price growth ground to a halt in October after 15 successive month-on-month increases, according to the Nationwide Building Society, Spectator reported.

Nationwide said the rate of monthly change in property values was 0% in October–marking the first time since June 2015 that prices have not increased month on month.

The Guardian reports that the average UK house price in October was £205,904 ($253,682), which was 4.6% higher than a year ago. The annual rate of growth has slowed, from a 5.3% increase seen in September.

  Pensions

Pensioners are being told to check their National Insurance records after it emerged that thousands of people are being paid too little state pension, according to the Daily Mail.

Mistakes in official records mean around 30,000 people are being underpaid the state pension, the Department for Work and Pensions has admitted.

It is feared that many people are missing out because of incorrect information held on government computers.

Meanwhile, a report from the Center for Economic and Business Research and wealth manager Brewin Dolphin shows pensioners’ incomes are rising faster than the median income for the working population.

Liz Elly of Brewin Dolphin told BBC Radio 4: “The baby boomers were able to get on the property market much earlier and our current working age generation are mired in debt and facing unaffordable housing.”

  Spending

New analysis of income and average expenditure statistics by Aegon has found that spending falls by half among those aged 50-65 to those aged 75 and over. Households aged 50-65 spend £463 a week, which falls to £373 between 65-75 and then £241 aged 75 and over.

At the same time the analysis found that incomes decline by just 6% between 50-65 and over 75, from £556 to £521–so while living costs decline, incomes remain relatively flat throughout retirement.

  Equity Release

The total value of equity release lending grew by more than a quarter year-on-year to a new record high of £571.6 million in the third quarter of 2016, according to the latest figures from the Equity Release Council.

It leaves total annual lending for 2016 on course to break through the £2 billion mark for the first time, having reached £1.48 billion in the first nine months of the year.

From July to September 2016, 7,414 new equity release plans were taken out: an increase of 11% from the previous quarter and up 23% year-on-year. This is also the first time the number of new plans exceeded 7,000 since Q4 2008.

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