State pensioners to ‘feel the pinch’ as inflation rises to 11.1% – ‘particularly hard hit! | Personal Finance | Finance
The record high inflation figures are down to rising energy bills and soaring food prices with the ONS saying it is the poorest households who will be the hardest hit. The latest Consumer Price Index data shows UK inflation grew by 11.1 percent in the year to October, which leaves each UK household needing to find £2,779 extra a year to maintain living standards.
Les Cameron, savings expert at M&G Wealth, said pensioners are some of the hardest hit by tthe cost of living.
He said: “With inflation on the rise we know the money in our pockets won’t go as far. But the actual levels of inflation we experience are much more personal than the headline figures.
“For those in retirement the impact of rising inflation can be disproportionately high – sometimes referred to as ‘silver inflation’.
“Retirees tend to be at home a lot more so are particularly hard hit by the increase in housing, water heating and gas.
“And once you’ve paid your heating you need to eat and, unfortunately, both of these are well in excess of the headline rates.”
READ MORE: Five remote jobs where you can work from anywhere and earn up to £136k
She said: “Inflation at a fresh 40-year high of 11.1 percent is difficult for consumers to digest when you consider all the other challenges hammering household finances at the moment– from rapidly rising interest rates to falling real incomes, a looming recession and the prospect of higher taxes in this week’s Autumn Statement.
“Looking ahead, the Bank of England expects the headline inflation rate to fall sharply from the middle of 2023 and halve from the current level by the fourth quarter, However, with inflation largely caused by global challenges, such as the war in Ukraine and the resulting energy price increases and food shortages, there’s never any guarantees.
“The past three years have already us shown that major global events, such as the pandemic and Putin’s war with Ukraine, can surprise us all.
“Domestically, however, with new Chancellor Jeremy Hunt expected to roll out a raft of tax rises this week, interest rates at 3% and expected to jump again this year and mortgage costs still high compared to the past decade, it is likely that inflation will ease from here.”
Shona Lowe, financial planning expert at abrdn said pension savers may need to have a rethink when it comes to savings and investments.
She said: “It’s more important than ever for people to consider ways to help mitigate the impact inflation is having on their money.
“This is particularly key for those that are relying on cash savings or investments, like retirees, as they will be seeing any cash savings lose real value as inflation increases and investment growth failing to keep pace.
“People shouldn’t panic and make hasty decisions, but do need to take some time to plan their best way through these challenging times, whether that’s revisiting their priorities when it comes to expenditure, considering which of their savings or investments should be used to meet that expenditure, seeing whether they can take advantage of higher interest rates on savings or reconsidering their investment strategy.”
Canada Life said today’s CPI figures show each UK household will need to find £2779 extra a year to maintain living standards, a collective £77.3billion.
Pensioners will be hoping the Chancellor commits to at least a “double digit increase” of the state pension and doesn’t give up on the triple lock promise.
Andrew Tully, technical director, at Canada Life said: “The cost-of-living crunch shows no sign of slowing as we head into a very tricky winter. Tomorrow’s Autumn Statement is unlikely to provide any immediate relief for households already struggling to make ends meet.
“With personal inflation rates at an eye-watering level, pensioners reliant on the state pension will be pinning their hopes on the Chancellor re-committing to a double-digit increase through the triple-lock promise, but even then this will hardly match the price rises pensioners are experiencing.”