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Inflation is personal

Inflation is the silent burglar, steeling your money. Why? Inflation means that your money buys less. The problem with inflation is that impacts different groups, including families, depending on their spending habits. Are you keeping an eye on your family’s personal inflation rate?

Inflation

Up and away

The Government set the inflation at target 2%, athlough last month inflation was 9.9%. Families who spend more of their money on food, energy, motoring and holidays are feeling highest personal inflation rates. Those who spend more than the average on housing costs (rent/mortgages) have seen less of a jump – for now.

It’s an age thing

If we look at different age groups, then:

  • Wealthy retirees have high inflation due travelling (holidays), which have seen prices rise rapidly due to fuel costs and labour shortages.
  • Students, who typically spend less on energy and don’t drive cars, have the lowest inflation.
  • Families will be in the middle depending on energy usage (cars & heating).

Poorest are worse off 

Families on benefits, or pensioners on the state pension or households on low income really do feel the pinch from inflation.

  1. Low-income families feel the rising cost of food, energy, transport and childcare. This is putting a great strain on their budgets.
  2. Benefits and the state pension rose by 3.1% in April 2022, but inflation is 10%. This exposes low-income households to a substantial inflation risk.
  3. The poorest 10% of households face higher inflation and big cuts to the living standards.

Inflation hits the poor the hardest, including the children. Relative child poverty is projected to reach its highest level since the 1990s. Inflation is silently steeling people's wealth.

The Bank of England has forecast inflation to keep rising this year, but they expect it to slow down next year, and be close to 2% in around two years. Given the latest governament spending plans and falling pound the Bank of England may have to raise rates faster and for longer. This is going to be a bumpy ride for all groups.

ChildMax continues to ensure your salary and pays your take home salary while you’re on 12 months’ unpaid leave, caring for a sick child. It starts from £49.50 or for easy budgeting an initial payment of £8.25 followed by 11 monthly payments of £3.75.

Visit at www.insurewithmax.com or call the UK call centre 0333 323 0098 for more information.

Sources:

https://www.ft.com/content/d1dc8d79-b0aa-4e44-b09e-083fe3e4fbf1?shareType=nongift

https://www.poverty.ac.uk/inflation-low-income-households-necessities-reports/inflation-%E2%80%98hits-poorest-families-hardest%E2%80%99

https://ifs.org.uk/news/inflation-hits-9-poorest-households-facing-even-higher-rates

https://www.bankofengland.co.uk/knowledgebank/will-inflation-in-the-uk-keep-rising 

Date: 26 September 2022 by Max Robinson