Inflation stayed above the target rate for 9 out of 12 months last year.
Read on to find out three ways “sticky inflation” could affect your finances.
1. Your daily expenses could increase.
It’s important to remember that “lower” inflation rates don’t indicate falling prices. So, as prices continue to climb, adapting your budget could help your outgoings under control.
2. Your cash savings could lose their real-terms value.
Cash savings are vulnerable to inflation, as the returns offered by many accounts often fall below the inflation rate. While it’s a good idea to keep some savings in ash, investing a portion of your wealth could help preserve its purchasing power.
3. Interest rates could remain high
The BoE decided to hold the base rate at 4.5% in its December meeting, which could affect borrowing costs.
While there is little you can do to change your repayment rates, having a diversified portfolio can help you mitigate excess costs in one area by balancing them with gains in other areas.
A financial planner can work with you to develop a strategy that helps protect your finances against sticky inflation.
To speak to a financial planner, please get in touch with Perennial Wealth via:
Website: perennialwealth.co.uk
Tel: 0117 959 6499
Email: info@perennialwealth.co.uk
Address: Trym Lodge, 1 Henbury Road, Bristol, UK, BS9 3HQ
