Inflation Is Sometimes Called The Hidden Risk Because It Quietly Chips Away At The Buying Power Of The Pound In Our Pockets

Category: Finance, Personal Finance.

Earlier this week the publication of a new study suggested that the British public is experiencing much greater financial pressure than the government figures indicate.

Overall, two out of three believe their personal inflation lies between four and nine per cent, with one in five people claiming is stands between ten and 15 per cent. According to statistics released by the Motley Fool, some nine out of ten consumers believe that the cost of living is rising by 3 per cent- about three times higher than the official number of 5 per cent. Meanwhile, those in Scotland suggested that inflation currently stands at 3 per cent- a fall from the 5 per cent noted in January. David Kuo, head of personal finance for the firm, said: "Older people, especially those who rely on retirement income, are some of the worst affected. On the other hand, Northern Ireland consumers could be facing a particular increase in difficulties with their day- to- day finances as they claim to face an inflation rate of 1 per cent- the highest figure noted in the country and up by 4 percentage points from six months ago. Furthermore, people relying on the basic state pension, which will only rise in line with government inflation figures, may feel the pinch even more. But it's hard to disguise a chip when it becomes a chunk. " Consequently he suggested that inflation is not" whittling away" consumers' income as official figures suggest but rather is leading towards a significant rise in debt problems. "For one in five people, the buying power of the pound in their pockets is being eroded at over twice this rate, " Mr Kuo claimed.

Inflation is sometimes called the hidden risk because it quietly chips away at the buying power of the pound in our pockets. Consumers aged 58 and over claimed inflation rates currently stand at 1 per cent, which could see these people particularly facing debt problems. However, although young people were said to have been the least affected, they claimed living costs had risen to 9 per cent a rise of a full percentage point since January. Meanwhile, those between 42 and 49- years- old claimed the highest rises in living costs at 6 per cent. But, in a challenge to the Motley Fool figures, research from Birmingham Midshires' Life 2 campaign has indicated that those over the age of 55 see themselves are being financially comfortable. However, only one in 50 of 18 to 24- year- olds were said to hold this level of satisfaction.

Some 19 per cent of those in the group claim they can afford the social life they want, with one in ten reported to be" totally satisfied" they can afford to indulge themselves. The study from the financial services firm also indicated that just over half( 55 per cent) of consumers aged above 55 with both a state and personal pension account say that they are confident that they can afford day- to- day expenses in later life, the largest proportion recorded among any working group. Jason Robinson, director of savings operations for Birmingham Midshires said: "The over- 55s are facing enormous change in their lives and many may be apprehensive about their retirement. "The director added: "It's great news that many people can look forward to financial and social freedom in later life- but, the more money, of course they have coming in from pensions and savings the more enjoyable retirement will be. " However, with inflation rates higher than officials figures and the government announcing yesterday that interest rates are rise to 75 per cent consumers of all ages could find their day- to- day finances squeezed. Meanwhile, this figure was said to have fallen to 15 per cent for Britons with just a state pension.