Mike Ambery, Retirement Savings Director at Standard Life plc, said: “Today’s inflation figure of 3.3% suggests that price pressures are starting to pick up against the backdrop of war in the Middle East, with the initial impact of volatile wholesale energy markets starting to feed through. However, this is unlikely to show the full picture. Energy prices have continued to rise into April, and their impact on the UK energy price cap - due to be updated in July - as well as on everyday costs like transport, food and other essentials, is still working its way through. The Bank of England is likely to remain cautious ahead of its interest rate decision next week. It will be balancing concerns about inflation drifting back towards 2022 levels with the need to support economic growth and jobs. While recent figures showed the labour market was holding up better than expected before the conflict in the Middle East, with unemployment falling in the three months to February, the jobs market remains tight and further interest rate rises could increase the risk of tipping the economy towards recession. At the same time, policymakers will be watching developments in the Middle East closely, including whether there are signs of a lasting ceasefire, given the implications this could have for energy prices and inflation more broadly. Against that backdrop, the Bank is likely to want clearer evidence on whether this renewed inflationary pressure proves temporary or more built in before making any significant moves. For households and those planning for retirement, this uncertainty underlines the value of flexibility and long-term thinking. Inflation can quietly erode spending power, particularly for those holding large amounts in cash. While cash savings remain important for day-to-day security and emergencies, having a longer-term plan that aims to keep pace with - or outstrip - inflation, through investments and pensions, can help people stay on track for the future, even when the economic picture is unsettled.”
Adam Gillespie, Partner at XPS Group: “Whilst many have already felt the impact of rising inflation at the petrol pump, the bigger worry for the UK economy - and for individuals - is what comes next. Energy bills are set to rise further from July, and food prices could follow. For Defined Benefit pension members in particular, the concern is a further sustained period of above-cap inflation. As many schemes limit some pension increases to either 2.5% or 3.0%, any prolonged CPI overshoot translates into real-terms losses. These are members who have only just emerged from the inflation shock of the Ukraine energy crisis, so another period of elevated inflation will feel especially painful. For Defined Contribution savers, the picture is more mixed. Higher than expected inflation can weigh on gilts and other assets in the short term, but over longer periods the outlook is less certain underlining the importance of diversification. And higher inflation shines a light on a bigger issue in the UK: whether DC strategies are really sufficient to protect living standards. The risks members face in retirement are not just about pot size - features such as inflation protection are a necessity. Today's figure also makes a Bank of England rate cut in April look almost unthinkable. The MPC had already signalled that CPI would stay above 3% for most of this year, but that was before the indirect effects of higher energy costs fed through to food and services. Rate cuts are now expected to be a 2027 story, not a 2026 story. And while aggregate DB funding remains resilient – with our research showing the surplus of UK DB schemes still above £200bn, supported by strong liability hedging positions – trustees and sponsors should not be complacent. Higher volatility of inflation and interest rates can blow protection off course precisely when it is needed most.”
Sarah Pennells, consumer finance specialist at Royal London said: "As expected, the inflation rate in the UK rose during March, placing added pressure on people’s finances. This will leave many feeling the squeeze as prices for goods and services continue to climb and now at a faster pace than they were previously. However, these latest figures don’t include the raft of changes to household bills that came into effect on April 1st and don’t fully reflect the food and fuel increases resulting from the conflict in the Middle East. Concern among consumers about their ability to manage everyday expenses will likely be increasing alongside inflation, and wider economic pressures, linked to interest rates and food costs. Some will doubtless make cutbacks to regular spending, but others may have little or no room to manoeuvre. However, if you’ve not reviewed your spending and budget recently and have been loyal to the same supermarket, broadband and mobile provider, you may be able to make savings. There are three ways to improve your finances when costs are rising: to spend less, to increase your income, and to get better value from the money you do spend. So, start by tracking what you spend, which banking apps make much easier to do, and see if there are areas where savings can be made. Keep an eye out for any better deals on offer for energy, broadband and your mobile phone; you should consider switching providers if it makes financial sense. Also, see if there’s any money you’re entitled to that you’ve missed out on – as billions of pounds in state benefits go unclaimed every year and there’s vast amounts in lost savings accounts, old pensions and unclaimed Premium Bond prizes as well. Checking for supermarket discounts or loyalty schemes will also help, as will setting a weekly budget, cooking meals from scratch, and planning purchases ahead. Finally, reaching out to organisations offering free, impartial help and advice can provide valuable support if you’re struggling to manage rising costs. If you do find yourself unable to pay your bills, speak to your provider at the earliest opportunity as there are often more help options available before things reach crisis point."
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