ECONOMIC OUTLOOK
HOUSE prices rose by 1.1% in October following a 1.2% decline in September, according to the latest figures from property group Rightmove.
The index has increased every October since it started in 2001, but Rightmove said this month’s is the largest since the 1.4% rise seen in 2014.
New sellers asked higher prices in eight out of 10 regions, it said, although there was a drop in the number of sales agreed.
The UK’s key inflation rate hit its highest for more than five years, driven up by increases in transport and food prices.
The Consumer Prices Index (CPI) rose to 3% in September, equalling the level hit in April 2012. It was up from 2.9% in August.
The data from the Office for National Statistics (ONS) means that there will be more pressure for a rate rise to try and tame inflation.
The figures are important for many reasons but especially because state pension payments from April 2018 will rise in line with September’s CPI.
Under the “triple lock” guarantee, the basic state pension rises by a rate equal to September’s CPI rate, earnings growth or 2.5%, whichever is the greatest. This places a significant squeeze on government finances.
At the moment, the full new state pension is £159.55 per week, equivalent to £8,296.60 per year.
Businesss rates will rise by 3.9% in April as a result of the latest data – the level of the Retail Prices Index (RPI).
The fall in the value of sterling since the referendum has been one factor behind the rise in the inflation rate because the cost of imported goods has increased.
The world economy is picking up momentum, but Brexit uncertainties continue to hold the UK back, according to the International Monetary Fund (IMF).
In its latest World Economic Outlook, the IMF said the global economy is growing faster than at any time since 2010. It estimates the world economy will expand 3.6% in 2017, up from 3.2% last year, with growth of 3.7% in 2018.
Growth forecasts for all advanced economies were upgraded with the notable exception of the UK, where it forecasts static GDP growth of 1.7% this year, slowing to 1.5% in 2018.
“The medium-term growth outlook [for the UK] is highly uncertain and will depend in part on the new economic relationship with the EU and the extent of the increase in barriers to trade, migration, and cross-border financial activity,” said the IMF.
There was further bad news for the UK economy as the Office for National Statistics (ONS) reported that the UK’s trade deficit widened to £5.6bn in August from £4.2bn in July.
However, there were also more positive signals, with industrial production up 1.6% year-on-year in August. The increase was driven by stronger-than-expected manufacturing data, the ONS said.