Inflation a cruel blow as households’ excess savings drain away, says Scottish Friendly

Kevin Brown, savings specialist at Scottish Friendly

INFLATION is now outpacing wage growth, as energy, fuel and food costs continue to rise, squeezing household budgets. Prices surged by 5.5% in the 12 months to January – up from 5.4% previously – as retailers reined in seasonal discounts on clothing and footwear. 

Reacting to today’s inflation figures, Kevin Brown, savings specialist at Scottish Friendly, commented:

“Households are being dealt a cruel blow as rising living costs are wiping out families’ disposable income at a time when many were looking forward to being able to spend more freely.”  

“Travel restrictions are easing, social distancing has ended and the economy is back and up running, but families are finding the money they may normally have left over, after paying for essentials, is being swallowed up by inflation.”

“Households in Britain built up a large cash pile of excess savings during the pandemic, but that money is draining away as food prices and fuel costs have spiked. Sadly, the worst is yet to come for households with tax rises and higher energy bills due from April.”

“On top of rising living costs, wages are failing to keep pace with inflation which is contributing to falling living standards. People should try pushing for salary increases where possible to help offset their increased expenditure, but inevitably most people are unlikely to benefit from a significant increase in earnings.

“For those households with excess savings still in place, it’s important to make this money work as hard as possible for you. Investing regularly, into the stock market for example, is one way to potentially earn more in interest than what you may be giving up in value by keeping your money in cash.”

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