Sarah Coles

Five years of inflation have substantially increased household costs, with prices up around 28%, including particularly sharp rises for olive oil, food, energy and mortgage interest. Sarah Coles argues that households should regularly update budgets, emergency-fund targets and retirement-income plans to reflect current essential costs. Inflation has affected retirees differently: the State Pension and inflation-linked income have generally kept pace, while level annuities have lost significant purchasing power. NS&I has raised rates on Premium Bonds and other savings products, although Premium Bonds may still underperform inflation and better rates are available elsewhere. Regular bill reviews and spending comparisons can help households adjust, while some technology and leisure goods have become cheaper.

Budget speculation can prompt damaging, panic-driven financial decisions, particularly premature pension withdrawals. Rather than reacting to rumours, people are advised to review tax-efficient options such as Stocks and Shares ISAs, Cash ISAs and additional pension contributions, while couples and families can consider sharing allowances and making affordable gifts. The choice between overpaying a mortgage and investing depends on returns, risk, liquidity and personal circumstances; a combination of both may provide the best balance.