Wine investments delivering record growth as 4% inflation erodes savings

Inflation has risen to the highest level in a decade as the Consumer Price Index data shows a 4.2% rise in the 12 months to 31stOctober 2021. With household incomes being stretched further and savings eroded, investment wines’ are enjoying a record 19 % growth trend over the same period and are offering a ‘safe-haven’ for investors’ capital.

Up from the September CPI measure of 3.1%, the latest 4.2% level is four times higher than the interest rates paid on an easy access savings account. Savers and pensioners are feeling the ‘pinch’ and some are looking at alternative strategies to protect their capital.

The Bank of England’s reticence to raise the interest rates in early November, to allow for further information on the labour market to be understood, has resulted in a rise of more than one percent in the cost of living in the last month. Furthermore, Sterling weakened off the back of the decision not to address rates, has added further cost to imported goods.

Continued issues in the energy market are complicating the decision on when to raise rates, how far and what will be the subsequent impact on households with limited and fixed incomes such as pensioners.

Fine wine performance compared to FTSE 100 – 12 months

BoE Governor, Andrew Bailey, stated that the labour market would be the most important factor in his vote and the current skills shortage, tightening labour market and rising wage growth are now all adding extra weight to the need to see interest rates rise.  The employment data published earlier this week may be the final box ticked for the Bank to take the necessary action in December. But will Bailey fancy the role of Scrooge especially if rising Covid rates force Boris into a ‘Festive’ lockdown, something he is determined to avoid.

All of this creates a great deal of uncertainty for investors – even the City got wrong-footed by the BoE decision not to up rates in early November. Wine investors, meanwhile, are enjoying both stability and strong returns. With the market trend seeing 19% growth for the most traded investment wines over the 12 months to 31st October 2021, wine investors are seeing their money gain value way beyond their savings accounts right now. Traditional safe-haven gold saw a -4.3% decline in value over the same period.

For the latest wine investment performance information see our November Market Update and to understand more about investing in fine wine speak to a member of our expert team on 0203 384 2262.