Last updated on April 16, 2014 at 6:49 EDT

Rising Inflation is a Setback for UK Households

April 17, 2012

CHESTER, England, April 17, 2012 /PRNewswire/ –

        - Basic rate taxpayers need a rate of 4.38 per cent to gain benefit in real
          terms, increasing to 5.83 per cent for higher rate taxpayers
        - 'Life in Limbo' Brits need the cost of living to reduce to get their plans
          back on track

Today’s announcement by The Bank of England that inflation (CPI) has risen for the
first time in six months to 3.5 per cent, from 3.4 per cent last month, is a setback for
UK households according to MoneySupermarket who are struggling to cope with the high cost
of living.

Research by MoneySupermarket reveals a staggering two thirds of Brits (65 per cent)
have been forced to put important life decisions on hold due to the current economic
climate and the high cost of living. The overall top areas people have put on hold include
home improvements (27 per cent) and short term saving (21 per cent). Those aged 18-34,
often considered the ‘prime age’ as far as important life changes are concerned, have had
to put the most on hold; 17 per cent have put off buying a house and 10 per cent have
delayed the sound of wedding bells.

The research also asked what would need to happen to get their plans back on track; an
increase in income (52 per cent) was the number one remedy, followed by 46 per cent who
said the cost of living needs to reduce.

Savers have also lost out due to high inflation levels, as they have struggled to gain
a real return on their saving pots. To beat inflation, basic rate tax payers now need an
account paying at least 4.38 per cent to gain benefit in real terms from their savings,
increasing to 5.83 per cent for higher rate tax payers, and 7.00 per cent for 50 per cent
tax payers. Only a handful of fixed rate Cash ISAs
[http://www.moneysupermarket.com/savings/fixed-rate-cash-isas ] and Fixed Rate Bonds beat
the rate for basic rate taxpayers, while no account beat the rate if you pay a higher rate
of taxation.

Kevin Mountford, head of banking, at MoneySupermarket.com, said: “The rise in
inflation once again impacts UK households who have been struggling to cope with rising
costs, and this increase is disappointing given inflation has been falling since late last

“Our research found people have been under a lot of strain from rising living costs
and lack of pay increases, with many being forced to delay exciting and important life
stages such as having children or buying their first home. High inflation combined with
low interest rates has been a real problem for UK savers
[http://www.moneysupermarket.com/savings ], especially those who rely on savings for a
regular income.

“Only a handful of savings accounts currently beat inflation, and in most cases you
have to tie up your funds in a fixed rate product to gain benefit. Consumers need to make
sure they are on the best deals possible to maximise any returns. The top paying savings
accounts currently offer rates over six times that of base rate so by choosing these, you
can reduce the impact inflation has on your pot. Despite inflation falling over the last
six months, it is clear that the pressures on inflation are not easing and it may be some
time before it moved towards The Bank of England’s own inflation target of two per cent.
Now is the time for households to use the opportunity to review all their finances and
find ways to maximise their income.”

Notes to Editors:

Please note: Full MoneySupermarket ‘Life in Limbo’ Infographic can be

downloaded here:


Opinium Research carried out an online survey of 2,010 UK adults aged 18+ from 10 to
13 of February 2012

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        Paul Lawler
        PR Manager Financial Services

SOURCE MoneySupermarket.com

Source: PR Newswire