With inflation for the third month in a row above 2 per cent, experts are concerned that people are not protecting themselves against the ravages of inflation.
The consumer prices index is now at 2.3 per cent, more than the Bank of England’s target of 2 per cent.
Kate Smith, head of pensions at Aegon, said: “Coming from a low inflation environment in recent years, people will have to get used to a period of higher sustained inflation and what this means to their pockets.
"With a recent poll showing over half of under 60s are unaware of the current rate of inflation, this is clearly not an issue people are tuned into.
“With the impact of inflation felt most keenly by pensioners, the issue of their spending power and the level of state pension increases has become a political hot topic.
"Politicians desperate to appeal to the grey vote and prevent pensioners slipping down the poverty ladder are sure to cover this as a matter of priority when they publish their manifestos next week.
“Inflation can hit people on fixed incomes hard, particularly pensioners.
"As people are living 20 or more years in retirement they need to think seriously about how they can protect themselves from the ravages of higher inflation eating away at their income and savings.
"Planning ahead and investing to outstrip the destructive effects of inflation could help maintain purchasing power. Getting professional advice could make all the difference.”
Tom Selby, senior analyst at AJ Bell, said: "The big danger with inflation is that it silently eats away at the value of people's savings.
"This is particularly the case for those who have money held in low interest-paying bank accounts or cash Isas.
"If the returns on these products are below inflation, you are effectively locking in to real-terms losses.
"Anyone who has bought a non-inflation protected annuity will also see their spending power diminished".
"As inflation rises, savers and investors should review their portfolios and consider whether their stock market exposure is appropriate."
stephanie.hawthorne@ft.com
