UK inflation surged to 2.3% in October, up from 1.7% in September, sparking fresh concerns about wealth erosion and unsettling financial markets.
This significant rise, coupled with signs of a potential return to rising inflation in the US, highlights how inflationary pressures on both sides of the Atlantic are disrupting investment landscapes and threatening the value of cash, according to the CEO of a leading independent financial advisory.
Nigel Green of deVere Group warned earlier this month that “inflation is creeping back.”
“We are now in a global environment where inflation is once again taking centre stage,” he said on the back of Wednesday’s UK CPI.
“UK inflation is accelerating, US inflationary pressures are set to intensify, and households, businesses and the markets will feel the heat.
“For those sitting on cash, the erosion of value is happening faster than many realise. Cash might feel like a safe choice, but in inflationary times, it’s a silent wealth destroyer. Investors need to act now to protect and grow their assets.”
The UK inflation spike comes amid a backdrop of government spending initiatives on housing, green energy, and public services, which, while growth-oriented, risk exacerbating inflation if not matched by productivity gains.
Meanwhile, the Bank of England, which cut interest rates earlier this month for the second time since 2020, faces mounting pressure to shift course if inflation continues to climb.
“Rising UK inflation is already unsettling markets, particularly the Pound Sterling, as investors weigh the likelihood of a pause—or even a reversal—in the Bank of England’s easing trajectory,” explained deVere’s Nigel Green.
“Similarly, in the US, Donald Trump’s return to the White House is poised to ignite inflationary pressures through ambitious spending programmes – of up to $1.5 trillion – and the reintroduction of tariffs, particularly in imports from China and Europe. Together, these developments are going to send ripples through global markets.”
Consumer costs
“These policies will raise production and consumer costs, which, combined with existing geopolitical tensions affecting energy prices, will add fuel to the fire of global inflation,” added Green.
Both the UK and US are experiencing the ripple effects of rising inflation in financial markets. The Pound Sterling remains under pressure as UK investors brace for policy uncertainty, with GBPUSD facing potential downside risks.
Similarly, in the US, the dollar has shown volatility amid expectations of inflationary policies, while equities are adjusting to the likelihood of higher costs and reduced purchasing power.
“Markets hate uncertainty, and rising inflation introduces exactly that. Bond yields, stock valuations, and currency movements all react to inflationary pressures.
“Investors who wait for clarity risk missing out on opportunities to reposition themselves for these new market realities,” added the deVere CEO.
In an environment of apparent rising inflation, holding cash is increasingly untenable. As inflation accelerates, the purchasing power of cash diminishes, reducing its real value over time. For investors, this means that cash, often seen as a low-risk asset, is no longer a safe haven.
Green emphasised that, “to preserve and grow wealth in today’s economy, diversification into inflation-proof assets is crucial.
“Rising inflation isn’t just coming — it appears to be here already. Now is the time to rethink financial strategies, move out of cash, and embrace assets that can protect and grow wealth. The investors who act decisively today will be the ones best-positioned to thrive tomorrow.”
