Inflation fears hitting UK households
Over half (55%) of UK households are worried about the rising cost of food, following the vote to leave the European Union.
The research from Scottish Friendly also found that a quarter of young adults (18-24) spend more than their income on essential expenditure, compared to one in six 25-34 years olds. Only 9% of over-55s find themselves in the same position.
Overall, the savings provider’s disposable income index found that households are not feeling better off with levels of spare cash remaining flat over the quarter. The average disposable income, after housing, food and bills have been paid, is £990 according to the research.
Despite employment rates remaining high, the combination of the falling value of sterling and a forecasted reduction in growth once Article 50 has been triggered, meant Scottish Friendly said that inflation weighed heavy over those they surveyed.
It said that a sizeable minority (46%) remain apprehensive about what impact Brexit will have on the pound in their pocket. Only a quarter of people overall are worried about the impact Brexit will have on their job, however there were greater levels of concern amongst younger workers with 49% of 25-34 years olds worried Brexit might put their job at risk.
How households are able to handle financial challenges often comes down to the level of spare cash that they have. Currently only one in five households feels that they have more cash at the end of the month than 12 months ago.
Half of households meanwhile are concerned about how they would meet large unexpected bills such as the car breaking down. The outlook remains less than positive too, with only 35% believing that they will be feeling more comfortable this time next year. Only half of households regularly save each month.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).