Market update - August 2018

The FTSE 100 had a difficult August, ending the month at 7,432.42, which was 4.1% lower than the July closing figure of  7,748.76. In contrast, in the US, the Dow Jones Industrial Average’s performance was up 2.2%, closing August at 25,964.82. In terms of £ Sterling, it ended August at 1.30 US Dollars. This was 1.2% lower than the closing figure at the end of July of 1.31 US Dollars. Against the Euro, it was a similar story with £ Sterling ending August at 1.12 Euros, which was 0.5% lower than the July closing figure. Inflation, as measured by the Consumer Prices Index including owner occupiers’ housing costs (CPIH), was 2.3% in July 2018 (this is July’s data which is reported in August). This was unchanged from the previous month.  The 12-month rate for the Consumer Prices Index (CPI) rate which excludes owner occupied housing costs and council tax was 2.5% in July 2018, up from 2.4% in June 2018. The Bank of England increased interest rates to 0.75% in August.  This is the first time the headline base rate has been 0.75%. Whilst the move is unlikely to have a significant impact on your finances, those on variable rate mortgages could see a small increase in their monthly payments. Payments will not change for those currently on fixed rate mortgages. Savers may benefit from a small increase in interest paid on their cash accounts, though rates offered through bank accounts remain feeble.