The FTSE All-Share reached an all-time high in May this year, to 4,324. But the “autumn shakedown” means it’s now 8% down for the year, according to AJ Bell’s Russ Mould.

But it’s not all been bad news for shareholders and pension savers.

Best and worst performing sectors in the FTSE All-Share, 2018 year to date

Source: Refinitiv data

There was some surprising news from the Office for National Statistics (ONS): September inflation data showed that price growth was just 0.1%, way down on August’s 0.7% growth and below the expected figure of 0.3%.

Year-on-year, inflation has grown 2.4% compared to 2.7% from a month earlier.

The fall has been driven mainly by food and non-alcoholic beverage prices, while transport, recreation and clothing have also made a down ward impact, according to Share Centre’s Helal Miah.

For equity investors, it means that returns are likely to be superior on a risk-adjusted basis than cash. And, for Miah, this is a key reason why shares should remain a significant part of investment portfolios.

Where’s inflation heading?

Miah points out that wage growth has continued, leading to consumers having more money in their pocket.

And as Miles Eakers, chief market analyst at FX and payments specialist Centtrip suggests, this is likely to lead to an increase in consumer spending, “adding to inflationary pressure in the coming months”.

But the current easing back of inflation means that the Bank of England is under less pressure to raise interest rates.

The impact of Brexit however, is the key factor. It is the issue that will impact on share prices, inflation and interest more than other factors – and without a clear direction of travel its impact is uncertain.

As the Share Centre’s Graham Spooner said in a statement: “The report has had zero effect on markets as Brexit looms ever larger and continues to eclipse other market news.”

Kevin Reed is one of the UK’s most senior accounting and finance journalists. He is a former editor of Accountancy Age and Financial Director, and writes regularly on corporate and professional services governance.

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Further reading on this topic:

Savers: Underestimate inflation at your peril