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Inflation squeeze continues as UK households will collectively need to find £39.6bn to maintain standard of living

The latest data shows UK inflation (CPI) grew by 5.1% in the twelve months to November 20211. This change in inflation leaves UK households collectively needing to find an extra £39.6bn2 a year to maintain their standard of living compared to 12 months ago, according to Canada Life.

 

Each household will typically need to spend an extra £1,4253 a year to maintain their standard of living compared to a year ago.

 

Andrew Tully, technical director, Canada Life commented:

“The latest inflation numbers give us little hope for any financial festive cheer. We are all feeling the pinch and the reality is the average UK household will need to find over a thousand pounds extra next year to maintain current living standards. We can feel this in our back pockets as everything is costing us more as we battle to balance our household budgets. With inflation headwinds growing stronger, living standards will continue to fall.

 

“The rising costs of living can disproportionately affect people with fixed incomes, including retirees who typically live off pension income. Building some form of protection against the ravages of inflation is important if people want to maintain their standard of living.

 

“Very few people currently buy an inflation proofed income at retirement. Blending the benefits of drawdown with some guarantees through an annuity can create the flexibility for people to bank a guaranteed income to pay the bills while also leaving money invested to pay for life’s little luxuries and help protect against inflation.

 

“A professional financial adviser can help you decide the best course of action for your personal circumstances and ensure you stay on track to enjoy the retirement you have worked hard for.”

 

 

Notes to editors

  1. Source: Statistics Consumer Price Index (November 2021). https://www.ons.gov.uk/economy/inflationandpriceindices
  2. Source: Canada Life calculations based on the reference ONS Family Spending in the UK https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/expenditure/bulletins/familyspendingintheuk/latest, which shows the average household expenditure for UK households is £537.70 a week (minus mortgage interest payments, cash and charitable donations).
  3. Source for the number of UK households: https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/families/bulletins/familiesandhouseholds/2020