EconomyJan 7 2022

Inflation causes 64% of savers to worry about finances

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Inflation causes 64% of savers to worry about finances
Hollie Adams/Bloomberg

Almost two thirds of savers are concerned about the impact rising inflation will have on their personal finances, Aegon has found.

Research from the provider found there was widespread concern among savers about the impact high inflation will have on their daily lives and finances after it reached a decade-high figure of 5.1 per cent in December.

Of the 2,000 individuals surveyed, 70 per cent of those aged 43 to 56 were concerned about inflation with a quarter (24 per cent) of respondents saying they were very concerned about the financial challenges they may face as a result.

Rising home energy prices (65 per cent) topped the list of worries and among those aged over 76, 80 per cent gave this as their top concern.

The provider said this was unsurprising given pensioners’ proportionately high spend on heating and given they are on fixed incomes, leaving them particularly at risk of high inflation. 

This is then made worse by the state pension only increasing by 3.1 per cent in April, two percentage points lower than where inflation is currently sitting.

Steven Cameron, pensions director at Aegon, said: “With inflation rising to its highest rate since 2011, many individuals are facing a cost-of-living crisis as prices surge. 

“At what is already a penny-pinching time for households the length of the country, our research shows that a high proportion are concerned about the immediate impact of inflation levels not seen for a decade on the affordability of everyday living, from hikes in gas and electricity costs to the price of essential items such as clothes and food.”

The research also revealed concerns about the impact inflation would have on people’s plans to plan ahead financially.

The third most cited concern (37 per cent) was the ability to save as much money followed closely by worry about the purchasing power of cash savings decreasing (36 per cent).

Cameron said: “A high proportion of those we surveyed said that they were concerned about not being able to save as much as a result of rising inflation as well as the purchasing power of cash savings decreasing. 

“Those holding large amounts in cash savings are particularly at risk from high inflation. Despite the Bank of England raising interest rates in December to 0.25 per cent, any of this increase passed on to savers is likely to be outweighed by inflation decreasing purchasing power.”

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