I saw this in a local newspaper yesterday. Is it true?

Well for starters the posh name is a Lunar Halo.

A lunar halo is caused by the refraction, reflection, and dispersion of light through ice particles suspended within thin, wispy, high altitude cirrus or cirrostratus clouds. As light passes through these hexagon-shaped ice crystals, it is bent at a 22-degree angle, creating a halo 22 degrees in radius (or 44 degrees in diameter). A double halo, sometimes with spokes, may be seen on rare occasions when light reflects off water or ice.

Diagram showing how a Lunar Halo is formed

The prism effect of light passing through these six-sided ice crystals separates the light into its various colors, resulting in a halo tinged with very pale rainbow colours with red on the inside and blue on the outside. The phenomenon of a lunar halo is similar to a rainbow produced by sunlight and rain falling between your eye and the sun.

Moon Halo

What does folklore say about a ring around the moon? Folklore says a lunar halo is the precursor of impending unsettled weather, especially during the winter months. This is often proved true, as cirrus and cirrostratus clouds generally precede rain and storm systems. Another version says that if you count the number of stars you can see in the ring that’s the number of days till it rains.

Lunar halos are, apparently, fairly common. So watch the night sky — and keep the umbrella handy!