Britons ‘spooked’ by rising cost of living
28th January 2022 15:38
by Myron Jobson from interactive investor
interactive investor comments on ONS inflation rate estimates for UK household groups.
- In December 2021 high-income households have experienced similar inflation (5.5%) to the low-income households (5.3%), but this hides differences at the lower level, according to the ONS.
- High-income households’ experience of inflation is being driven by rising transport costs, on which they spend a larger proportion of their expenditure when compared with low-income households, while for low-income households housing-related costs are more of a factor.
- Retired and non-retired households have experienced similar inflation rates since the April 2021, with both at 5.4% in December 2021.
Myron Jobson, Personal Finance Campaigner, interactive investor, says: “Consumers are outright spooked by the escalating cost of living. Even in the first half of 2021, when we conducted the fieldwork for our latest Great British Retirement Survey of 10,000 consumers, two in five (39%) of respondents said their biggest financial concern was the rising cost of living. Only falls in the value of stocks and shares rank higher (cited by 48% of respondents). This sentiment is held most among non-retired respondents (42% versus 34% among retirees).
“The abrupt Covid-linked rise in inflation has deepened inequality in the UK - further exacerbating the gap that widened by the 2008 credit crunch. One inflation number doesn’t fit all – everyone has their own personal inflation number. Some people may spend a larger proportion of their income on heating their home, on eating out, or on petrol. While high-income and low-income households have experienced similar annual inflation rates since 2014, the impact of the rising cost of living and the loss of purchasing power is felt most by those on low-income households living on a tight budget with little room to spare more.
“The cost-of-living situation is set to bite hardest in spring, with energy bills set to rise by up to 50% while millions will see an increase in the cost of broadband, TV and landline services as well as mobile contracts. It is worth keeping track of your spending habits to try to ensure that you remain financially afloat amid the escalating cost of living. If you don’t have a budget, now is a good time to start one.”
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