The Cost-of-Living Crisis Squeeze and Inflation – What Does This Mean for You?

With the United Kingdom’s levels of inflation at a near 40 years high, the Bank of England, to ease the difficulties facing millions of UK households has announced an increase in interest rates to 3.5%.

The UK is far from alone and as the global economy struggles to emerge from the post pandemic world, fiscal recovery has been hampered by the ongoing war in Ukraine, the squeeze on global energy & foodstuff production as well as the wider worldwide economic slowdown.

What Is Inflation and How Is It Measured?

With the UK economy officially in recession and with inflation sitting at 9.1% (down from 10.5% in December), the economic outlook remains challenging.

The rate of inflation is a term that is often banded about as a measure of the overall state of a nation’s economy and relates to the increase in the cost of something over time. In short, the rates of inflation are key to the prices that we pay for our everyday items and services which is tracked and declared by the UK’s Office for National Statistics (ONS).

What Can Be Done to Lower Inflation & Ease the Cost of Living

With millions throughout the UK suffering from a toxic combination of the cost of living and high inflation. There are a number of things that you can do however to reduce the impact of higher inflation rates, including:

The Bank of England has a target to keep inflation at 2% but the current rate of inflation is nearly five times – in times past a typical response has been to up the interest rates to offset rising inflation which makes borrowing, credit and mortgages more expensive but lowers the amounts that people can spend – with few purchases, demand decreases and consequently it is hoped that prices lower.

In order to help you overcome the true costs of higher inflation, we will be releasing an inflation busting guide to help you maximise the impact on you and your family.

Are Wages Keeping Pace with Inflation?

For many millions of workers in the UK, rates of pay are simply not keeping pace with the rise in prices for everyday items and services & according to official ONS figures, average wages (including and excluding bonuses) rose by 6.4% in November of last year on the rates of the previous November. In short what we are seeing is a scissor effect of rising costs of living with a growing gap between modestly rising incomes and the actual cost of living wrought by international crises.

Where we see the biggest rise in wages disparities is between the public sector (3.3%) and private sector (7.2%) which means that millions of hard-pressed public workers are suffering disproportionately in relation to their private sector colleagues.

A lowering of inflation does not necessarily mean that prices will subside – it simply means that they slow their rise. The Bank of England has said it is expecting inflation to peak at around 11% and falling to half that around 5% by years end. In a note of optimism, the ONS has said that it predicts inflation will fall to around 3.75% by Q4 of 2023 which is well below half of the current level.

Ensure That Your Finances Are Working as They Should be to Help Offset the Cost of Living Crisis

Fintuity are able assist you in a number of ways of modelling and managing your personal finances, including a cutting edge Virtual Adviser, a library of up to date financial advice, a complimentary IFA meeting as well as a searchable blog with hundreds of articles and a complimentary financial health check to allow you to maximise your finances. The best place to start however is with a financial health check to allow us to work out how best to help you.

Our complimentary financial health check is designed to give you a complete financial check-up. It will diagnose the areas of your finances that need attention and provide you with options to improve your financial future.

Introducing Fintuity – The UK’s Digital IFA!

Fintuity is like a traditional IFA, only we are an online adviser which means we can offer a more cost effective, time-sensitive and flexible service! We offer the full range of IFA services via our digital platform, at below industry rates and at your convenience. Please do not hesitate to get in touch to see how we can assist you.

For all enquiries please visit www.fintuity.com or contact Fintuity’s Communications Manager, Nic Cobb at nic.cobb@fintuity.com.

Please Note: All information, references and dates included in this article were accurate at the time of publishing.