Inflation, house prices, pensions and car insurance

UK inflation will quadruple to about 4 per cent in the second half of next year and cut disposable income, according to a leading think tank.

The rise in prices will ‘accelerate rapidly’ during 2017 as the fall in sterling is passed on to consumers, according to the National Institute for Economic and Social Research. The revised figure is significantly higher than the 3 per cent it forecast in August. ‘Households have really got a choice. Do they spend less or do they start saving less?’ Angus Armstrong, director of macroeconomics at NIESR, told the BBC’s Today programme. Meanwhile, ratings agency Moody’s is thinking about downgrading the UK over Brexit fears. Kathrin Muehlbronner, a Moody’s senior vice president, said: ‘We would downgrade the UK’s sovereign rating if the outcome of the negotiations with the EU was a loss of access to the single market as this would materially damage its medium-term growth prospects.’ House prices House price growth ground to a halt in October after 15 successive month-on-month increases, according to the Nationwide Building Society. Nationwide said the rate of monthly change in property values was 0 per cent 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, which was 4.6 per cent higher than a year ago. The annual rate of growth has slowed, from a 5.3 per cent 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.

Car insurance One of the biggest insurance companies in Britain is to use social media to analyse the personalities of car owners and set the price of their insurance. The unprecedented move highlights the start of a new era for how companies use online personal data and will start a debate about privacy. The Guardian reports that Admiral Insurance will analyse the Facebook accounts of first-time car owners to look for personality traits that are linked to safe driving. For example, individuals who are identified as conscientious and well-organised will score well. 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 per cent 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 per cent from the previous quarter and up 23 per cent year-on-year. This is also the first time the number of new plans exceeded 7,000 since Q4 2008.

Pensioners

A report from the Centre 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.’