July 12, 2011
UK Consumers Continue to Feel Effects of Inflation Despite 0.3 per Cent Drop in May
CHESTER, England, July 12, 2011 /PRNewswire/ --
- High inflation stretches household budgets, making saving difficult - One in four moneysupermarket.com customers can no longer afford to save - One in five put less aside than they used to
Today's announcement by the Bank of England that inflation has fallen to
4.2 per cent is welcome news for the UK economy, however the announcement
marks the 18th consecutive month where inflation has been higher than the
Bank of England's target of two per cent. High living costs continue to be a
problem for UK households, especially those trying to put money aside or
protect the value of their existing savings
[http://www.moneysupermarket.com/savings ] pots.
[http://www.moneysupermarket.com/savings ], Britain's number one comparison
site, asked customers whether high inflation has affected their savings
habits and reveals just one in five consumers (18 per cent) have not felt the
A quarter of respondents (25 per cent) claimed they can no longer afford
to save as the cost of living has increased, highlighting just how much of a
squeeze rising costs are having on household budgets. A further 15 per cent
of those surveyed don't save anything now, a figure that has risen from nine
per cent in April 2011.** The poll also revealed almost one in five (18.6
per cent) save less than they used to and 10 per cent are now paying off
more debt due to inflation.
High inflation is also having a negative effect on existing savings
pots. To beat inflation, basic rate tax payers need an account paying at
least 5.26 per cent to gain benefit in real terms from their savings,
increasing to 7.01 per cent for higher rate tax payers and a staggering 8.41
per cent for top rate tax payers. There is no UK savings account
[http://www.moneysupermarket.com/savings ] that pays enough to offset the
eroding effects of inflation.
Kevin Mountford, head of banking at moneysupermarket.com said: "Whilst
this drop can only be seen as good news, inflation is still running at very
high levels and when combined with a static Bank of England Base Rate this
represents a very real problem for UK's consumers, particularly those trying
to save. For those with existing savings, protecting their pots should be a
priority as inflation will be slowly eating away at the value of their
money. For others, the ability to save is being hampered by rising cost of
living leading to a significant fall in disposable income.
"Finding a product that beats inflation is almost impossible, however it
is still important to check your savings rate, shop around and be prepared
to switch. Even if they can't beat inflation, the difference between the
average and top paying rates is considerable, so switching to a better deal
can help savers limit the impact on their pots.
"Clearly the majority of consumers are finding it tough to free up any
money to put aside and with factor like energy price hikes, the cost price
of fuel and pay freezes for many workers, this situation seems set to
continue. However, regular saving is still extremely important and many
people will be surprised by how much cash they can free up by simply sitting
down and reviewing their finances. Every penny counts at the moment so
looking at day-to-day spending as well as bigger commitments, such as
heating, insurance and financial products are really important."
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Notes to Editors:
* moneysupermarket.com carried out a site poll between 30 June 2011 and
07 July 2011. Total 3,325 respondents.
** moneysupermarket.com carried out a site poll between 25 March 2011
and 01 April 2011. The poll received 2,089 respondents
For further information, please contact: Jemma Green / Duncan Skehens / Victoria Murray Lansons Communications +44(0)20 7294 3642 / 020 7566 9732 / 0207 566 9708 [email protected] / [email protected] / [email protected] Kevin Mountford Head of banking +44(0)787 237 8537 [email protected] Paul Lawler PR Manager (Financial Services) +44(0)1244 370317 [email protected]