CHESTER, England, April 17, 2012 /PRNewswire/ --
- Basic rate taxpayers need a rate of 4.38 per cent to gain benefit in real terms, increasing to 5.83 per cent for higher rate taxpayers
- 'Life in Limbo' Brits need the cost of living to reduce to get their plans back on track
Today's announcement by The Bank of England that inflation (CPI) has risen for the first time in six months to 3.5 per cent, from 3.4 per cent last month, is a setback for UK households according to MoneySupermarket who are struggling to cope with the high cost of living.
Research by MoneySupermarket reveals a staggering two thirds of Brits (65 per cent) have been forced to put important life decisions on hold due to the current economic climate and the high cost of living. The overall top areas people have put on hold include home improvements (27 per cent) and short term saving (21 per cent). Those aged 18-34, often considered the 'prime age' as far as important life changes are concerned, have had to put the most on hold; 17 per cent have put off buying a house and 10 per cent have delayed the sound of wedding bells.
The research also asked what would need to happen to get their plans back on track; an increase in income (52 per cent) was the number one remedy, followed by 46 per cent who said the cost of living needs to reduce.
Savers have also lost out due to high inflation levels, as they have struggled to gain a real return on their saving pots. To beat inflation, basic rate tax payers now need an account paying at least 4.38 per cent to gain benefit in real terms from their savings, increasing to 5.83 per cent for higher rate tax payers, and 7.00 per cent for 50 per cent tax payers. Only a handful of fixed rate Cash ISAs and Fixed Rate Bonds beat the rate for basic rate taxpayers, while no account beat the rate if you pay a higher rate of taxation.
Kevin Mountford, head of banking, at MoneySupermarket.com, said: "The rise in inflation once again impacts UK households who have been struggling to cope with rising costs, and this increase is disappointing given inflation has been falling since late last year.
"Our research found people have been under a lot of strain from rising living costs and lack of pay increases, with many being forced to delay exciting and important life stages such as having children or buying their first home. High inflation combined with low interest rates has been a real problem for UK savers, especially those who rely on savings for a regular income.
"Only a handful of savings accounts currently beat inflation, and in most cases you have to tie up your funds in a fixed rate product to gain benefit. Consumers need to make sure they are on the best deals possible to maximise any returns. The top paying savings accounts currently offer rates over six times that of base rate so by choosing these, you can reduce the impact inflation has on your pot. Despite inflation falling over the last six months, it is clear that the pressures on inflation are not easing and it may be some time before it moved towards The Bank of England's own inflation target of two per cent. Now is the time for households to use the opportunity to review all their finances and find ways to maximise their income."
Notes to Editors:
Please note: Full MoneySupermarket 'Life in Limbo' Infographic can be downloaded here: http://www.moneysupermarket.com/money/life-in-limbo-2012-infographic.aspx
Opinium Research carried out an online survey of 2,010 UK adults aged 18+ from 10 to 13 of February 2012
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