Becky O’Connor, Director of Public Affairs at PensionBee, commented: “The heat of high inflation is beginning to cool a little, giving hope to households that the worst could be over for both price and interest rate rises.
“But for anyone who is hanging on by their fingernails, this decline in prices may be cold comfort. Many households, especially those facing high prices and punishing borrowing costs, still face months of difficulty.
“If prices continue to come down but rates remain high, the worst of the economic pain will be transferred from the general population dealing with high prices in the shops, to mortgage borrowers grappling with monthly repayments.”
David Pye, Director at leading independent consultancy Broadstone, said: “After benefitting from around a £1,000 increase to the State Pension this year, retirees look set for another multi-hundred-pound boost as high inflation persists.
“It looks likely that the State Pension will rise above £11,000 next year which will further embed its importance as the foundation of pensioners’ income. At this current rate of increase, it won’t be long before retirees start tripping over the £12,500 income tax threshold solely based on the State Pension.
“However, with government finances under pressure, the soaring cost of the State Pension triple-lock will raise further questions around its long-term viability. A demographic bomb is soon to hit with a significant number of baby boomers approaching retirement which will ratchet up the State Pension’s cost to the taxpayer’s public purse.”
Simeon Willis, XPS Pensions Group Chief Investment Officer, commented: “Today’s encouraging figures show that we are finally making ground in the fight against inflation. Whilst the 12-month number is still too high, what's encouraging is that the price increases over June in isolation have slowed considerably. If this trend continues, we could see the 12-month figure come down to target by Spring next year.
Whilst 12-month inflation at current levels remains damaging for any pensioners with non-inflation linked benefits, this announcement represents welcome news and means than the impact on the real value of a retiree’s pension is less than it might otherwise have been.”
Dean Butler, Managing Director for Retail Direct at Standard Life, part of Phoenix Group said: “Inflation just isn’t going away as quickly as many would have hoped. We’re now in the second half of 2023 and we’re still seeing the CPI come in just below 8% (7.9%), and still hitting households across the country where it hurts as prices continue to rise just at a slightly slower rate. On top of the obvious impact on monthly finances, people lucky enough to have cash-based savings are now starting to feel the impact of savings rates failing to keep up with inflation, for a sustained period of time.
“While returns are never guaranteed, one way to counter the impact of inflation is to consider investing. In the UK, we can sometimes be a nation of savers, but not investors, meaning the chance to benefit from the potential power of investment growth can be missed. Pensions and stocks and shares ISA’s can be great places to start. It’s important to bear in mind, however, that any sum invested can go down as well as up and they sometimes aren’t as easy to access as cash-based savings, so it’s good idea to keep a ‘rainy day’ fund in cash for emergencies too, if you can.”
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