17 March 2022

Interest rate rise offers little comfort as inflation remains high

3 min read

Neil Cameron
Neil Cameron

PR Manager

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  • Interest rates rise by a quarter-point, from 0.5 per cent to 0.75 per cent
  • Rise is little solace to savers, in particular pensioners, coping with suspension of the state pension triple lock

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.

Savers

“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.

 

For further information please contact:

Neil Cameron, PR Manager

Notes to Editors

*Royal London commissioned a survey by Opinium between 25 February and 1 March 2022 with a sample of 4,001 nationally representative UK adults.