Last week was another grim week for UK consumers, with the latest indicators suggesting that the economy’s still struggling to push ahead following the downturn of the last few years. How is it affecting you?
Inflation in October 2011 (CPI) was confirmed at 5% last Tuesday.
Then the following day we were faced with the triple-whammy: unemployment reaching 2.62 million; youth unemployment topping the 1 million mark; and the Bank of England’s growth predictions for 2011 and 2012 being revised downwards to around 1%.
Savers and investors struggle to match inflation
While the cost of the goods and services you have to pay for is increasing by 5% each year, the best you can expect to earn on your savings is around 3%. The very best five-year fixed rate bonds are currently only paying 4.65% – and that’s before tax.
Are these discrepancies starting to affect your life yet? I’ve particularly noticed that the increasing price of petrol means that putting a tenner in the tank seems to get me virtually nowhere these days. My savings rate has also reverted to a paltry 0.5% and this week I’ve moved all my cash into a new internet account that pays a better rate, but still no great shakes.
Poor returns on cash deposits have persuaded some people to consider equity-based products as an alternative, but growth in the markets has been, at best, patchy.
The FTSE 100 has battled with various negative factors since the Northern Rock affair heralded the start of the credit crunch – the latest being the eurozone crisis – and the index is below the level it was 12 months ago.
A few silver linings
If there is one hint of a silver lining it’s that increases in the state pension are now linked to inflation. Pensioners can at least be sure that their state pension income will rise in line with inflation each year. The relatively low cost of mortgage borrowing (if you can get a mortgage) is another current bright note.
So how are you coping as things get even gloomier? Perhaps you run a business that’s continuing to thrive at the moment, or you’ve benefited from the ongoing cheap cost of borrowing? Are there any uplifting stories amid the doom and gloom of recent economic news?