Many countries are currently battling high inflation, including the United Kingdom. Although the recent announcement that the rate in the UK has fallen from 7.9% to 6.8% is a small step in the right direction, almost everyone will agree that the battle is far from over.
It’s a certainty that vast swathes of people up and down the country will be saying to friends and family, “It was much better in my day”, and in some ways, they are probably right. However, ‘we are where we are’ and high inflation’s adverse effects are just one more thing to work around.
In these current times, people seem to have become somewhat blasé about paying higher prices for goods and services, and even though the rate of inflation is easing, businesses, producers, shops, and supermarkets will be unlikely to reflect this until the very last moment, or if they are at risk of losing custom by not doing so.
While there is an opportunity to earn more money under the stigma of a high-inflationary environment, human nature dictates that the majority peddling their services and wares will do so. After all, prices are not based on what is fair and right for consumers and suppliers but rather on what their competitors are doing and the demands of their shareholders.
How to change things and make the money one has go further requires more financially-focused minds than ours to explain; however, we do have the advantage of calling on some financial experts who have offered their advice on preventing expensive everyday items and services from destroying your savings.
The latest ONS¹ report shows that core consumer prices (excluding energy, food, alcohol and tobacco) rose by 6.4% in the 12 months up to July 2023, while the annual rate for consumer services in that month was 6.5%, up from 6.3% in June.
Despite the rate of inflation easing, causing the Consumer Prices Index (CPI) for July to be lower than the rate of 7.9% in June, down from a peak of 11.1% in October, the overall annual increase shows that Brits are still paying more for food, household bills and other commodities and services compared to last year.
Lucinda O’Brien an expert at money.co.uk, explains how you can minimise the negative financial impact of inflation and maximise your savings despite higher outgoings compared to previous years.
She says, “The ONS’ report on consumer prices is bad news for long-term savings, as higher outgoings on everyday items and services see savings increasingly pushed to the bottom of Brits’ financial priority list.
“Despite seeing a slight decline in the rate of these prices compared to last month, thanks to the inflation rate dropping from 7.9% to 6.8%, it will likely take some time for the CPI to return to that of last year – if at all.
“So it’s vital to not delay starting to build your savings pot – in fact, the higher cost of necessities means you need a savings pot to fall back on more than ever – so remind yourself, if not now, then when?
“While nothing can be done about the price of consumer items, it is possible to cut back on unnecessary purchases that could be running your monthly expenditure up at a time when every pound counts – so have a look into your spending and set yourself a realistic monthly budget.
“It’s also crucial to make your money work for you by putting money away in a high-yield savings account rather than letting it sit in a current account, missing out on money earned in interest.
“An instant access savings account will allow you to withdraw money as and when you need to, without incurring any penalties, so you can still build your savings while being able to access the money if unexpected costs come up.
“For example, Hampshire Trust Bank is currently offering 4.55% AER variable on their Online Easy Access Account that has no notice, penalties, charges or limits on withdrawals.”
For more information and guidance on saving, including the best savings rates available today, visit www.money.co.uk/savings-accounts.
¹ ONS: Consumer price inflation, UK: July 2023.
Read more financial features here.
You must be logged in to post a comment.