MorganAsh comments on CPI Inflation figures

17 January 2024

Following the release of the latest ONS consumer price inflation figures, which shows UK inflation increase to 4.0% - the first increase in almost a year, here is a comment from MorganAsh.

MorganAsh provides the MorganAsh Resilience System (MARS) to enable brokers, advisers and financial services to firms better manage and evaluate consumer vulnerability – and comply with Consumer Duty.

Andrew Gething, managing director of MorganAsh said: “Today’s inflation figures are a reminder that firms shouldn’t count their chickens just yet. While there has been much expectation of reaching the 2% target and a potential base-rate drop, the first increase in inflation in almost a year shows we may still be some way off. Markets and economists have been very confident about future cuts, despite ongoing caution from the central bank.

“Positive news on wholesale gas prices, as well as easing food and petrol prices are no doubt encouraging, although a December rise has been driven by pressure on key consumables such as alcohol and tobacco. The Bank of England will of course have one eye on a number of macro challenges, such as escalations off the Yemen coast, with attacks on cargo ships in the Red Sea. Rising inflation in the US and wage growth at home are also key factors moving forward.

“As the financial markets and many firms in general all find more confidence and look ahead to potential cuts, we mustn’t forget the situation we are in now, and the difficulty still facing many of our clients. Pressures on household budgets, particularly for those remortgaging from historically low rates, could push many into a vulnerable position. Given the greater responsibilities given to firms by Consumer Duty, we must also consider much more than just the financial vulnerabilities of our clients to deliver good outcomes.

“It comes as no surprise to see that the FCA continues to prioritise consumer vulnerability in its ongoing work around Consumer Duty – a cornerstone of its regulatory approach. It wants to see firms identifying the proportion of vulnerable people within their customer base – and them demonstrating that they are achieving the best possible outcomes for this cohort. Sadly, the FCA has found many are falling well behind in this – and they lack the suitable data to not only identify their customers, but also to monitor outcomes.”