Inflation drops to five year low!

Inflation drops to five year low!

We should attach to that headline that it’s hardly surprising that inflation would drop with an historical drop in consumer demand but still, good news is good news.

Given the year that’s preceded so far, it’s worth taking good news with both hands and that, whilst low inflation isn’t always great news for everybody, it certainly has its advantages and opportunities not just for property investors, but also for consumers and spenders.

On the flip side, savers in conventional high street products tend to suffer as the interest rate paid to them for storing their money also drops. This isn’t likely to make a huge material difference though, given that interest rates set by the Bank of England have been historically low ever since the 2008 financial crash and there are very few options on the high street for returns above 1%.

This has, in turn, driven more people than ever to invest their money into stocks and shares, government bonds and of course property. There are those that have turned to Buy to Let which, going off growth figures in the same period, appears to have been a very wise choice indeed.

Those who have invested in wise stock choices or growth bonds with some governments have done well to a point, but that looks set to end, with governments having access to extremely cheap borrowing and global markets suffering due to the Coronavirus.

Eat out to help out

Despite a giggle-inducing name, there seems to be agreement amongst most that the scheme, introduced by Chancellor Rishi Sunak throughout August, has been a success.

The scheme, which saw the government subsidise meals out on Mondays, Tuesdays and Wednesdays, when eaten in a restaurant, was a huge hit and saw many pubs and restaurants booked up completely through the month.

According to The BBC, ‘Discounts for more than 100 million meals were claimed through the scheme.

Prices in restaurants and cafes were 2.6% lower than in August last year, the first time they had been negative since records began in 1989, the Office for National Statistics (ONS) said.

The cut to the rate of value added tax (VAT) also helped drive prices lower, it added.’

Low interest in property

Inflation is good news more broadly for consumers and those

buying goods, but it also means that interest rates tend to follow suit from financial institutions.

This often has the effect of stimulating spending across the economy, which appears to be supported by the fact that The FT were reporting
this week that the UK appears to be on for its strongest quarter on record for Q3 in 2020.

The main benefit for those in property investment is cheap borrowing, with historically low rates allowing landlords, Buy to Let investors and others to expand portfolios extremely cheaply whilst property prices continue to increase and set new records.

Now, it would seem, is the ideal opportunity to thank Rishi’s deals and use the economic benefit to expand your portfolio.

Are you looking to expand your property portfolio? Take a look at our nationwide portfolio for high-yielding properties across the UK.

Spread the word: