Mike Ambery, Retirement Savings Director at Standard Life plc said: “Today’s inflation figure of 2.8% shows some welcome easing, with inflation falling from 3.3% in March. However, with inflation still above the Bank of England’s 2% target, the overall picture remains uncertain and pressures have by no means disappeared.
“While a lower reading offers some immediate reassurance, there are signs inflation could pick up again through the summer. Rising global energy costs, driven by war in the Middle East, are expected to feed through into a higher Ofgem price cap from 1st July - pushing household bills back up and highlighting just how uneven the path back to target could be. At the same time, the recent easing may partly reflect more cautious consumers, who have held back on spending amid uncertainty in recent months.
“With inflationary risks ahead, the Bank of England is likely to take a cautious approach to interest rates. That could mean borrowing costs remain higher for longer, and we’re already seeing some mortgage rates edge up despite the Bank holding rates steady. While that will add further pressure for borrowers, there is some more positive news for savers, who may continue to benefit from relatively high returns on cash in the near term if they shop around for the best rates.
“For those approaching or in retirement, this environment presents a mixed picture. Expectations of higher interest rates have supported more attractive annuity rates, potentially boosting the level of guaranteed income available. However, with prices still unpredictable and the risk that inflation continues to chip away at spending power, having a clear plan for how you’ll turn your savings into a reliable and sustainable income - and reviewing it regularly - is key to staying on track and maintaining financial confidence in retirement.”
|
