UK inflation (CPI) increased by 9.4 per cent in the year to June 2022, the fastest rate in 40 years, according to the most recent data from the Office for National Statistics.
As a result, UK consumers will find it even more difficult to keep up with the rising cost of petrol and food. To maintain living standards, each household must now find an extra £2,353 every year, according to Canada Life.
Canada Life technical director Andrew Tully says: “Today’s inflation numbers are a further hammer blow to households right across the UK, who will be left reeling from the continuing surge in prices for everyday items. Economists predict the peak of inflation will arrive later in the year, so the bad news will only get worse. And yet, the peak, when it does come, may offer little respite.
“With wages officially lagging way behind the cost of living, how long inflation remains high will determine our living standards for years to come. This is the issue the Bank of England will grapple with as it signals bigger interest rate hikes are on the horizon as it navigates the choppy waters that lay ahead.”
XPS Pensions Group senior consultant Charlotte Jones says: “Against a backdrop of rising prices, optimising retirement income is more important than ever. How a pension is calculated can be difficult to understand at the best of times and most members are unlikely to be aware that their pension could be very different if they chose to retire in 2023 compared to 2022.
“With inflation expected to fall in the long-term, this is only likely to be an issue that members will need support with over the next year or so. There are various ways that schemes can ensure their members have all of the information they need to navigate through their retirement decisions either via adjustments to retirement quotes or communicating with members.”
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