64% of UK concerned about personal finances amid rising inflation

Sixty-four per cent of people in the UK are concerned about the impact that an increase in inflation will have on their personal finances, a study from Aegon has suggested.

This figure rose to 70% among those surveyed between the ages of 43 and 56.

Aegon’s research, based on a study among 2,000 people, comes after CPI inflation reached a decade high figure of 5.1% in December, with the pension provider suggesting its findings highlight “widespread concern” among consumers of the impact that such high inflation will have on daily life and their savings.

Rising home energy prices (65%) topped the list of worries among respondents, with 80% of those aged 76 and over citing it as a top concern.

While rising inflation leads to a decrease in purchasing power for those with significant cash savings or fixed incomes, Aegon find that a high number of respondents also expressed apprehension around the impact on their ability to plan ahead financially. The third most cited concern (37%) was the ability to save as much money followed closely by worry about the purchasing power of cash savings decreasing (36%).

Aegon pensions director, Steven Cameron, said that inflation rising to its highest rate since 2011 is leaving many individuals facing a “cost-of-living crisis”.

“At what is already a penny-pinching time for households the length of the country, our research shows that a high proportion are concerned about the immediate impact of inflation levels not seen for a decade on the affordability of everyday living, from hikes in gas and electricity costs to the price of essential items such as clothes and food,” Cameron commented.

“Undoubtedly, those on a fixed income face a tricky time ahead, and these include pensioners who will be significantly impacted with a sizeable gap between the current 5.1% inflation level and the much lower 3.2% used to calculate next year's state pension increase.”

He added: “Those holding large amounts in cash savings are particularly at risk from high inflation. Despite the Bank of England raising interest rates in December to 0.25%, any of this increase passed on to savers is likely to outweighed by inflation decreasing purchasing power.”

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