Inflation remains negative in October

Upward price pressures for clothing and footwear and a range of recreational goods were offset by downward price pressures for university tuition fees, food, alcohol and tobacco, resulting in no change to the overall rate of inflation.

CPIH (not a National Statistic) grew by 0.2% in the year to October 2015, unchanged from September 2015.

This is the third time this year – and since 1960 – that inflation has been negative.

In his latest letter to George Osborne, Carney said he expected inflation to remain below the 1%-mark until the second half of 2016.

Maike Currie, associate investment director, Fidelity International, said:

“The Bank of England’s suggestion that interest rates may stay at rock bottom throughout next year may just be the start of it. Interest rates could stay low for the foreseeable future if low inflation turns out to be less cyclical than structural. In a low interest-rate environment, investors continue to view equity income as a safe haven and a rare source of yield.”

Kevin Caley, Managing Director of peer-to-peer lender ThinCats, commented:

“Low inflation continues to be the thorn in the side of the Bank of England, which now has another good reason to drag its feet on interest rates. We’re unlikely to see a rise in the base rate for some time now, forcing those reliant on their investment income to consider alternative investments.

"With significant volatility in financial markets, many investors are putting their money into property, unperturbed by the economic fallout the last time the property market overheated. All this uncertainty and low returns are a dangerous cocktail for investors, but diversification can mute many of the risks. The current environment will make the option of fixed interest secured business loans as provided by peer to peer platforms a viable way of diversifying an investment portfolio to improve returns and stability.”