Commenting on today’s announcement from the Bank of England, Sarah Pennells, Consumer Finance Specialist at Royal London says:
“The third rise in interest rates in as many months is likely to worry people as they face sharp rises in household bills and the general cost of living. Wage growth at 3.8% is failing to keep up with inflation, currently sitting at 5.5%, but predicted to rise further, leading to ever-increasing demands on people’s take-home pay. It’s a situation that’s contributing to growing anxiety with UK adults about the cost of living and how they’ll be able to cover price increases this year.
“On the surface, the Bank of England’s move to try and rein in inflation by raising interest rates looks like good news for savers. However, with inflation rising significantly faster, savings are losing ground and spending power, so it’s not as positive as it first seems.
“The cost of living squeeze is also forcing UK adults to dip into their savings, with a quarter (24%) of full time workers* looking to access some or all of their short term savings to help them get by day to day.
“If today’s rise feeds through to higher interest rates on savings, it will doubtless be welcomed. However, the bigger worry – especially for those who rely on the state pension – is the fact that their state pension payments will only rise by 3.1% in April as a result of the triple lock suspension.