UK households 'who are retirees' warned 'there's challenging times ahead'

Retirees have been warned they face challenging times ahead as the UK inflation rate rises. Figures from the Office for National Statistics (ONS) show the government’s preferred measure of the cost of living climbed again as domestic energy bills fell by less last month than in July 2023.

Gabriella Dickens, G7 economist at Axa Investment Managers, said July’s rise was not a one-off. “The headline rate will rise again over the next few months, as the sharp declines in energy prices in 2023 are not repeated. We expect inflation to end the year marginally in excess of 2.5%,” she said.

Lily Megson, Policy Director at My Pension Expert, said: “A small uptick in inflation certainly isn’t great news after the long journey back to target levels, but it isn’t devastating either. Critically, it should serve as a reminder that we are not yet out of the woods. Until inflation stabilises, things will be challenging for Britain’s retirees and those planning their retirement – particularly following years of their savings facing a walloping from high inflation.

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“So, what needs to be done? Frankly, the onus is on our new government to ensure that savers are given the help and support they need to make well-informed financial decisions, even in times of uncertainty. In practice, that looks like enabling access to financial advice, as well as education and guidance on savings and investments.”

Jason Hollands, managing director of Bestinvest by Evelyn Partners, said this morning’s inflation rate drop could be good news for investors. He said: “The combination of easing inflation, the prospect of lower borrowing costs and an improving UK growth outlook should also prove supportive for UK equities, especially the more domestically focused small and medium sized names, which have been deeply unloved in recent times.

“This could be a good entry point for investors, as UK equity valuations remain very cheap compared to global equities, a point evidently not lost on the wave of bids for British companies by foreign acquirers and private equity funds we have seen recently.

“The UK stock market has certainly been confronted with many challenges including a dearth of IPOs and companies being lured to overseas exchanges, but better economic news, high levels of share buybacks and a wave of bids are creating lots of opportunities for investors.”