LONDON (CU)_UK inflation in November jumped to a whopping 5.1 per cent, its highest rate in a decade. According to the Office for National Statistics, this record increase was driven by higher prices of food, transport, clothing and footwear. The speed of increase has taken forecasters by surprise, with the Bank of England saying inflation will peak at 5 per cent, but not before April.
As consumers face a ‘cost of living catastrophe’, the amount of cash available for spending among UK households have suffered the sharpest fall in almost eight years. A recent report published by the insurer Scottish Widows, shows that high inflation and rising energy bills hit hard on people’s pockets at the end of last year, leading to the steepest decline in cash availability since the beginning of 2014.
Accordingly, people were increasingly pessimistic about their future finances as they enter into the New Year, according to the company’s quarterly household finance index. The report was compiled by Ipsos Mori and IHS Markit on behalf of the insurer, with the participation of 1,500 individuals. It found that pressure on savings and disposable income intensified in the final months of 2021, pushing both to its lowest level over the past seven years.
It comes amidst a separate report from the Royal Society for Arts which showed that the cost of living crisis hit hardest on young adults, as their finances are expected to be damaged by inflation, rising taxes and student debt. Of the 1,000 young adults who participated in the survey by the think-tank, 47 per cent said they were unable to or was just about managing to make ends meet each month.
“Young people across the UK face a toxic cocktail of inadequate work and safety nets, high levels of debt, and a rising cost of living,” Fran Landreth Strong, the lead author of the report, said. “Our research shows that this results in a worrying number of young people facing financial precarity, with significant impact on their mental and physical health and their confidence about the future. Without proper action, we risk creating a ‘generation precariat’, unable to invest in their futures and move confidently into adulthood.”
