Steven Cameron, Pensions Director at Aegon comments on today’s inflation figure: In a matter of months, inflation has gone from a distant 1980s memory to a ‘flashing red threat’ to millions of households across the UK today. The further increase to 10.1% from 9.4% last month means we are now into double digits, with rises expected to skyrocket further to 13% later this year. Put another way, your £10 last year is worth £9 today.
“With the final destination of energy prices unknown, the big question is how and to what extent the Government can support individuals facing further massive energy cap hikes. Research (*) this month from Aegon showed financial worries are already at almost double the levels during the pandemic and this latest inflation increase, crossing the double digit threshold, will dial those worries up another notch.
“This latest inflation hike comes a day after official figures showed year on year increases in average regular earnings have slowed to 4.7%, well under half the current 10.1% rate of inflation, creating the worst loss in ‘real terms’ earnings for decades. For millions, the overriding focus will be on paying bills over the winter, but the aftermath could also come at a cost to longer term financial futures.”
Andrew Tully, technical director, Canada Life commented: “Today’s inflation numbers will leave households right across the country reeling from spiralling living costs with no light at the end of the tunnel. The immediate outlook looks bleak, with The Bank of England predicting the peak of inflation to come later this year at around 13%. The peak, when it does come, will offer little respite when the tail of inflation is predicted to last well into next year and not come close to the target of around 2% for two years.
“While UK workers continue to feel the pain as wages lag inflation, there will be some positive news in the coming months for retirees. As inflation marches on, September’s data will determine the living standards for millions of retirees across the UK for the coming year, and it is highly likely the state pension is on track to increase by a record amount in April 2023.”
As the cost of living crisis continues to take its toll, new research from Canada Life reveals two fifths of UK adults (39%) say they have made cutbacks to their spending as a result of rising prices, with 37% worried about their own, or their household finances, and 31% already feeling the squeeze on their financial situation.
Andrew Tully comments: “People are clearly making cutbacks where they can and many are worried about their household finances. Unfortunately the worst is yet to come unless we see a significant intervention from the government in the coming weeks.”
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