UK inflation has increased to the highest rate in 30 years, squeezing living standards and putting pressure on the Bank of England to raise interest rates again.
According to data published by the ONS today, consumer prices rose at an annual rate of 5.5 per cent last month, up from 5.4 per cent in December and well above the 0.7 per cent in January 2021.
According to the FT, the January rate was higher than analysts forecasts. .
UK inflation was more than double the Bank of England target of 2 per cent and the cost of living is increasing at nearly twice the rate of the 3.1% increase in the payment of the state pension promised for April.
Commenting on this news, Becky O’Connor, Head of Pensions and Savings at interactive investor has mailed me;-
“With every confirmation of the inexorable increase in price rises, it becomes harder for families to see beyond getting through the next week, nevermind the next few years.
“Surviving the here and now makes future-proofing harder. Life plans are being put on hold as daily living costs increasingly suck up earnings and benefits. For many, there is little if anything left to play or plan with.”
She’s right;- bother the macro- this cuts to matters of human happiness.
For retirees dependent on the state pension
It’s good to see someone working for a savings organisation putting the people who have no savings first. Here’s more from Beccy’s passionate pen.
“Millions of people rely on the state pension in later life. Pensioners don’t get pay rises – they get upratings that depend on the rate of inflation the previous September. This April, the state pension will rise by 3.1% – the level of inflation as it was in September but now dwarfed by the current rate of inflation.
The average pensioner receives £159.11 from their state pension, according to Government statistics. A rise of 3.1% takes this to £164 a week. A rise of 5.5% in line with current inflation would take this to £167.86 a week. The Government is likely to come under more pressure to increase payments to pensioners as they find it increasingly difficult to cover the basics such as heating. The Government abandoned the state pension triple lock because high earnings rise figures would have taken the April uprating above 8% and has since come under fierce criticism in the face of significant inflation.
I hope I was half way as effective at getting this point across when I spoke to the CIPP yesterday.
“Pensioners need to make sure they are taking advantage of all discounts, offers and additional benefits that are targeted at people on the state pension. Those on very low incomes might wish to check eligibility for Pension Credit. Don’t forget other benefits, such as carer’s allowance, for which you may be eligible.”
And for those who have nothing but access to limited savings in pensions , Beccy has this to say
“Don’t panic. If you don’t need money held in your pension or ISA in the short term, be patient and avoid selling at a loss. If you do, consider delaying accessing it if your portfolio has suffered.”