...but consumers remain under pressure, says interactive investor.
Commenting, Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “The second consecutive monthly fall in inflation will raise hopes that peak inflation is behind us, but there is still a long way to go before inflation reverts to normal levels. For now, the ‘new normal’ of high inflation and rising interest rates threaten to squeeze household finances further.
“Inflation might be cooling, largely owing to a fall in prices at the pump and in clothing, but this is offset by rises in everyday goods and services. The continued rise in food prices continues to be a pain point for many Britons – with those on low incomes hit hardest as they spend a greater portion of their incomes on food. The annual rate of inflation for this category has risen for 17 consecutive months. Part of what’s fuelling this are price jumps in everyday larder products such as milk, cheese and eggs, where prices overall rose 4.1% between November and December 2022. Food inflation is sticky because consumers are resigned to paying it as they form part of essential expenditure for many.
“High inflation doesn’t just erode purchasing power, but it grates on personal wealth, with many households using up savings and leaning on credit cards to cover everyday expenses.
“It has been a volatile couple of years for personal finances and more of the same is expected in 2023. As such it remains important to keep on top of your finances. The headline inflation figure can dramatically differ from your own personal inflation number, so it is worth keeping tabs on your spending habits. It may be easier said than done, but where possible, look for ways to boost your savings and pay down debt.”
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