Money News

Latest inflation rise will cost Brits £40bn

By Martin Fagan - news@consumerchoices.co.uk

Maintaining our standard of living will cost us £636.70 each a year, says MGM Advantage.

With the latest CPI inflation rate reaching 4.5%, UK households need to find an extra £39.7 billion to maintain the standard of living enjoyed 12 months ago, according to MGM Advantage.

The retirement specialist has said that, to maintain the same living standards as a year ago, the UK population of 62.4 million would need to spend an additional £636.70 per person this year.

A typical UK household would need to spend an extra £1,530 a year to maintain their standard of living from a year ago, while the corresponding figure for households where the main occupant is aged 65-74 is £955, and for older households (75 and over) it is £704.

"The latest CPI rate of 4.5% will continue to hurt people financially, especially in retirement,” said Aston Goodey, director at MGM Advantage.

“Given that people are living longer with a shrinking retirement income pot means further retirement income uncertainty.”

A separate research project undertaken by investment company Alliance Trust found that 65-74- year-olds now face inflation rates of 5.4%, the highest rate of inflation for this age group since October 2008.

This is because elderly households allocate more of their spending to goods and services that have been hit hardest by rising prices, such as food, household energy and petrol.

"As expected, we are starting to see the recently announced gas and electricity price increases pushing the inflation rates of the elderly households higher,” said Linsey Thomson, senior economic analyst at Alliance Trust.

“Having said this, conditions remain tough for everyone, with all age groups facing an inflation rate higher than the official rate.”