Investors should focus on the future outlook

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Tuesday, 13 September 2011 11:40

Bestinvest believes that investors need to look past the current level of inflation and focus on the outlook going forward.

Bestinvest’s Adrian Lowcock explained: “Inflation has once again risen to its highest point, last reached in the summer of 2008 before the financial crisis. There is still some pressures on inflation in the short term, particularly from utility costs – many suppliers have recently put up prices which we expect will continue to feed into the inflation figures for September, however once this has been factored in we expect inflation to fall throughout 2012 as the rise in VAT works its way out of the measure and the recent falls in energy costs including oil, gas and electricity will start to have a negative effect on inflation.

“A fall in the oil price has a knock on effect throughout the whole economy as transport costs should also come down. In 12 months time we could be seeing pressure on utilities to drop their prices. Investors shouldn’t focus on the current level of inflation but instead on the outlook going forward.

“Whilst inflation is likely to drop the weak economic backdrop and the concerns over the Eurozone mean that investors should continue to look to defensive investments in the west and ensure they are securing a real return from their investments.

“Equity income continues to be the asset class of choice as investors can earn 4% or more from shares and benefit from rising dividends, capital appreciation and exposure to overseas markets.”