Price inflation hit 11.1 per cent a year in October, the highest figure since 1981 according to the latest ONS figures.
This latest price rise is being driven by higher food and energy costs, with the ONS saying gas prices have climbed by 130 per cent over the past year, and electricity by around 66 per cent.
Those in the pensions industry say this latest jump will put pressure on those saving for retirement, as well as those drawing benefits from their pension plan. There is concern that if people need to take more money to meet increasing bills this could creates issues for the long term sustainability of these retirement funds.
AJ Bell head of personal finance Laura Suter says this latest inflation rise is broadly in line with the Bank of England’s latest expectations, but she points out that as recently as February the BoE was expecting a peak of around 7 per cent this year – showing just how fast the environment is changing.
She adds: “Buried in the details of the data are some alarming facts. In the past month alone we saw the same increase in prices that we did in the entire year to July last year. On top of that, energy costs have risen by almost 90 per cent in the past year, with gas prices more than double what they were a year earlier. That clearly is unsustainable for families.”
My Pension Expert CEO Andrew Megson says: “Inflation remains sky high as savers’ confidence continues to plummet.” He pointed out the company’s own research has revealed that over a quarter of Britons aged 40 and over no longer have confidence in their pension due to this economic volatility. Something must be done to alleviate this crippling financial pressure.”
“All eyes will be on the Chancellor tomorrow, with the hope that he can provide some much-needed reassurances to struggling pension planners.
Finally giving a clear answer regarding the future of the triple lock would be a step in the right direction.” He also called for the government to prioritise the launch of the pension dashboard to help support savers and investors.
Interactive Investor senior personal finance analyst Myron Jobson adds: “Tomorrow’s Autumn Statement could hold even more gloomy news for Britons, with the chancellor confirming over the weekend that everyone will have to may more tax and there will be cuts to public spending in a bid to get a handle on the UK’s growing debt load.
“The Bank of England doesn’t anticipate a sharp fall in inflation until the middle of next year, which means the cost-of-living stranglehold on household budgets looks set to remain for some time.”
He pointed out that the impact of inflation is unique to every individual because spending habits vary greatly from person to person – meaning someone’s personal inflation rate might end up being lower, or higher, than the overall index. As such, it is worth keeping tabs on your spending habits to get a better idea of the goods and services that are eating most into your budget, and where you could cut back.”