Economic strength is good for investments, analyst indicates

Wed, 17 Jan 2007

The continuing strength of the economy means that equity investments are continuing to perform well in the stock market , it has been claimed.

Ted Scott, manager of the UK Growth &Income Fund from investments specialists F&C Asset Management , was commenting after confirmation was made that consumer prices index inflation has now hit three per cent.

This represents the highest inflationary figure since 1995.

Moreover, if inflation rises again, Mervyn King, chairman of the Bank of England's monetary policy committee, would be required to write an open letter explaining the issue to chancellor Gordon Brown, the banking industry and the general public.

However, Mr Scott claimed that the inflationary fluctuations have not had an adverse impact upon the investments sector.

"Equities have remained resilient as the economy has continued to grow strongly and company profits have generally met or exceeded expectations," he said.

He added: "Inflation is generally good for equities as they are a hedge against rising prices."

Earlier this week, Tesco revealed it had seen like-for-like sales excluding petrol grow by 5.9 per cent in the six weeks to January 6th 2007.

The FTSE100-listed company is the largest supermarket chain in the UK.

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