Inflation rate rise: What it means for you

Britons warned of damaging impact of rising inflation

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The Consumer Prices Index (CPI) rose by 9.1 percent in the year to May 2022, up from 9.0 percent in April, revealed figures released today by the Office for National Statistics (ONS). As a result, experts have warned more Britons are beginning to “feel the squeeze on their bank accounts”.

The money experts from said: “With inflation rising at record levels, more and more British households are feeling the squeeze on their bank accounts.

“Interest on savings accounts can easily be gobbled up by price increases – therefore, it’s essential that you check your money is earning as much interest as it possibly can.”

As well as impacting personal savings, inflation has a direct effect on the cost of a number of things and can see people’s wages decrease in value.

What is inflation?

Inflation refers to the general rise in the level of prices for goods and services.

It is one of the key measures of financial stability and wellbeing and impacts how much people can buy for their money.

Inflation is the opposite of deflation, which describes the general fall in the price level.

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How does inflation impact you?

Inflation is important for individuals because it determines how far your money will go.

For instance, if inflation was two percent for the cost of a litre of petrol, motorists will need to spend two percent more than 12 months earlier.

If wages do not rise in tandem with inflation, your purchasing power and ultimately your standard of living are likely to fall.

Things like grocery prices can increase, meaning you get less for the amount of money you spend.

Analysts Kantar have suggested annual grocery prices will be hiked by £380 this year due to rising prices.

That is an increase of £100 since April alone.

Inflation rises can also be linked to the energy price cap rise, which is set to soar once again towards the end of the year.

According to Cornwall Insight, energy prices are expected to skyrocket to a staggering average annual bill of £2,980 this October at the next price cap increment.

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