It has been reported by the Consumer Price Index (CPI) that inflation has increased to 3%, and is at its highest level for five and a half years.
This figure is higher than the average growth of wages in the UK, which have only risen by 2.1%.
How will this affect pensions?
Increased inflation means that those receiving the state pension will see a 3% increase in their basic state pension to £164.33 a week starting from April 2018.
This rise in inflation also presents an increase for those who qualified for the state pension before April, meaning they will also receive a higher amount per week – at £125.96 to be exact.
How will this affect investments?
For people who have stored their savings in traditional savings account or cash ISAs, the value of their savings will have most likely dropped. This is because the inflation level is undoubtedly higher than the interest savings are receiving in these accounts.
However, there are ways to help beat the effects of inflation on your savings. For example, investing with an informed strategy in stocks and shares is often seen as a long-term solution instead of keeping money stored in cash. However, the value of these can go down as well as up.
For those that are comfortable with the risk, it’s a good idea to seek advice on lessening the impacts of rising inflation on your savings through investing.
If you’re looking for financial advice regarding investments and reducing the impact of inflation on your savings, talk to our financial advice team. Please call on 01926 492406 or email us at firstname.lastname@example.org to make an appointment.