High Inflation Tips Breaking Point for UK Household Finances
By Moneysupermarket.com, PRNEMonday, June 13, 2011
CHESTER, England, June 14, 2011 -
- A Quarter of UK Consumers Struggle to
Make Ends Meet - Energy Price Hikes add to the Nation’s Soaring Living
Costs
Today’s announcement by the Bank of England that inflation
remained at 4.5 per cent, offers some respite for consumers from
another sharp jump in the cost of living and the ’squeezing’ effect
of rising prices on household budgets. However, the high cost of
living continues to be a problem for families with recent
announcements of August energy price increases meaning most
households will need to batten down the hatches on their finances
in the coming months.
Research from
reveals weekly outgoings for the average British adult rose by
GBP54 over the past six months. Worryingly, the research showed
almost a quarter of those surveyed (22 per cent) had already
reached their ‘affordability tipping point’, and would be unable to
cope if their monthly expenditure was stretched any further.
Today’s announcement that inflation remains high will heap more
pressure on those already unable to cope.
The research also found that one in five (19 per cent) of Brits
felt bills such as heating were placing the biggest strain on their
household finances. Scottish Power has recently announced 19 and 10
per cent price rises to gas and electricity respectively, adding
GBP175 to the average cost of a yearly bill for 2.4 million
households, which comes into effect in August. With other providers
expected to unveil price hikes, millions more struggling consumers
will feeling the effects of rising prices over the coming weeks and
months and place further strain on the nation’s finances.
Kevin Mountford, head of banking at moneysupermarket.com said:
“The sharp sting of high inflation is not new to UK households, as
consumers have battled with the rising cost of living over the last
12 months. Energy hikes, the soaring price of petrol and the rising
cost of everyday basics such as food, have hit households hard.
Many workers also have to deal with pay freezes, meaning their
incomes are actually dropping in real terms, it is no surprise many
feel like their finances are either at, or rapidly approaching
breaking point.
“Inflation is still having a huge effect on the nation’s savings
pots. To beat inflation, basic rate tax payers need an account
paying at least 5.63 per cent to gain benefit in real terms from
their savings, increasing to 7.51 per cent for higher rate tax
payers. The low number of products currently offering a
return above inflation, means keeping a closer eye on their
interest rates and being prepared to switch is more important than
ever. Even if savers can’t beat inflation, the difference between
the average and top paying rates is considerable, so switching to a
better deal can help to limit the erosion.
“Those who need to free up some cash need to sit down and
consider all of their outgoings. In addition to looking at
day-to-day spend items like groceries and petrol, look at some of
your bigger costs, including heating, car and home insurance, and
review your financial products like credit cards and
accounts. Using a comparison website to shop around can help
people to ensure they are on the best product for their individual
needs, allowing them to make big savings where it counts.”
Notes to Editors:
* Opinium Research conducted research between 15th and 18th
April 2011, amongst 2,170 nationally representative adults aged
18+
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Tags: Chester, England, June 14, Moneysupermarket.com, United Kingdom
