Collectively, UK households will need to spend an additional £21.2bn to maintain the current standard of living for the next year, according to Retirement Advantage.

The most recent data illustrates that UK inflation grew by 7.2% in February 2018, a decline over the growth of 3% seen the month before.

“The fall in the headline rate of inflation will be welcome news for hard working households across the country. However inflation is still running ahead of the Bank of England target of 2% and will continue to hit those people on fixed incomes the hardest,” said Retirement Advantage pensions technical director Andrew Tully.

“To maintain standards of living, each household will need to spend an extra £777 this year, not easy when average wage growth is currently around 2.5%. Wage growth needs to move beyond that if the squeeze on living standards is to reduce.”

AJ Bell have further commented on the inflation rate increase, stating that “the war on savers continues to offer up casualties” as savers who have held their money in a UK bank account have seen their savings grow by a “paltry” 4% in total, which is “dwarfed” by the 30% increase in inflation since 2009.

AJ Bell chief investment officer Kevin Doran said: “Inflation is eating away the value of savers’ money and this should act as a spur to anyone who has large amounts of savings held in low or zero-interest paying bank accounts to consider whether taking some investment risk could help at least preserve the spending power of their savings.”

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