Published on: October 23, 2020

Normal service has resumed; after taking some time off to recharge the batteries, prior to the final stretch of the calendar year, I am back to provide you with this week’s News, Views and Truths.

Regular readers will be aware of our inflation focus for the coming year. Both the effects of price increases on clients’ wealth and how, we believe, you are able to counter this through careful asset diversification.  Well, this week’s edition is no different, with the Office of National Statistics (ONS) releasing the latest inflation numbers yesterday.  And it’s on the rise.

And I absolutely appreciate that the rise is from a very low base of 0.2% as a result of the government’s “Eat Out to Help Out” scheme, but as the scheme has now stopped, the price index has risen to 0.5%.

Aside from that headline rise, catering services prices rose 4.1% between August and September 2020, compared with a rise of 0.2% between the same two months in 2019.  Transport costs rose for the first time since March, partly because the price of second-hand cars was boosted by increased demand as people, reportedly, looked to reduce their reliance on public transport.

Average petrol prices also rose to 113.3p per litre in September 2020, up from 113.1p in August. However, that was still some way below the 127.3p recorded in September 2019.  Also, the drop in the cost of airfares usually seen in the September inflation index had much less effect this year.  Airfares would normally fall substantially at this time due to the end of the school holidays, but with prices subdued this year, as fewer people have been travelling abroad, the price drop has been less significant.

So what could this mean?  One view is that in the light of continued low inflation, the Bank of England may increase its monetary stimulus measures next month to boost the ailing economy.  With CPI inflation just 0.5% in September, it’s hard to think of reasons why the Bank of England would not consider launching another round of Quantitative Easing, which would likely be announced at the November meeting. 

And despite public borrowing still jumping, the government may yet spend more.

Is this another case of the can being kicked down the round?  Tune in to find out more…

This week’s “When Andrew Met…” interview is on the website here… It’s the first in a new series of interviews focusing on income, in which I talk to some of the UK’s leading income investors on the headwinds to this particular investment discipline.  This week I talked to Stephen Anness, Head of Global Equities and Invesco and manager of the Invesco Global Equity Income fund, and we discussed his approach to generating a sustainable and increasing income stream for investors using a wide selection of global companies.

As I said, I have lined up a long list of very impressive fund managers for this series; Dan Hanbury of River and Mercantile, Mike Clements of Downing and Dan Carter of Jupiter to name but three.  And to make sure you do not miss out on any of these, subscribe to our newly-launched YouTube channel here, by hitting the “subscribe” button and making sure you click on the ‘notification bell’ icon so you do not miss out on our latest content.

Stay safe, stay positive and I shall see you all next week.

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