The Bank of England’s latest inflation forecasts make for grim reading. They predict that inflation will remain above 4pc throughout the winter before peaking at around 5pc in April.

Of course, those forecasts may already be out of date. Inflation reached 4.2pc in October against the Bank’s prediction of “just under 4pc”. With a “false start” on expected interest rate rises at this month’s meeting of the Monetary Policy Committee, the outlook for investors who seek to maintain, or even grow, their spending power could become increasingly challenging in the coming months.

As a result, Pennon, the FTSE 250 water services company, could become increasingly attractive. It aims to increase dividends by an annual rate 2 percentage points higher than inflation on the “CPIH” measure over the next four years.

This task is made easier by the fact that regulatory revenue controls link its revenue to the CPIH. The CPIH has been the Office for National Statistics’ main inflation index since 2017 and includes council tax as well as owner occupiers’ housing costs. It currently stands at 3.8pc.

Meanwhile, Pennon began the second phase of a £400m share buyback programme last month following the sale of its waste management business, Viridor, in July 2020. It used part of the proceeds from the sale to pay a special dividend and also acquired Bristol Water in a £425m deal, which is subject to regulatory clearance.

Perhaps more importantly, it reduced total debt by £1.1bn so that it had a net cash position at the end of the 2021 financial year.

Of its remaining debt, more than 60pc is repayable at a fixed interest rate while 26pc is index-linked. The latter figure is among the lowest in the water services industry and could put the firm in a relatively strong position in an era in which higher inflation prevails. More details on its financial performance will be included in its half-year results due on Tuesday.