Focus on personal finances as UK inflation rises

With inflation rising and food and fuel prices soaring, terms like financial literacy and spending management have become some of the biggest buzzwords of the last few months.

The concept is simple. Healthy spending habits and financial prudence can help protect households from unmanageable debt and ensure they have enough savings to cushion against further economic shocks.

In the UK, for example, the Office for National Statistics recently announced that the consumer price index (CPI), a well-known indicator of inflation, rose 10.1% in the year to July, signaling double-digit inflation for the first time since 1982.

In these unprecedented times, it is not surprising that financial education and budgeting have become pressing issues, both on the national agenda and for consumers.

Continue reading: PYMNTS Intelligence: How Financial Literacy Affects Consumers’ Digital-First Banking Preferences

Digital-first challenger banks like Monzo, Revolut and Starling have jumped in, introducing new features to help customers manage their money more effectively. These smart tools are designed to give users a clear picture of their spending patterns so they can save and budget using detailed spend reports.

Related: Revolut’s “Pockets” tool is designed to help people organize payments

These digital banking apps can also provide notifications to keep budgets on track, and bill management features like Revolut Pockets and Monzo Pots allow users to organize payments and allocate a portion of their monthly budget to recurring payments.

Difficult task awaits next UK PM

For Britons living on the poverty line, no budget is likely to fully absorb the impact of price increases, which have already caused the average UK food bill to rise by £380 YoY (YoY).

Continue reading: UK shoppers feel under pressure as the average annual grocery bill rises by £380 yoy

However, to provide some relief, the country’s Department for Work and Pensions (DWP) took an initiative last month and made the first installment of a two-part payout to recipients of means-tested and disability pensions and retirees. Eligible citizens received a direct bank transfer of up to £326 ($384), with a second payment expected in the autumn.

See more: UK government disburses $43.6 billion to support households

However, more will be required to help struggling UK households to keep their heads above water and strong financial management will become increasingly important in the coming months.

This is all the more critical as households are expected to come under severe pressure this autumn from a surge in energy bills that will push inflation above 13%, according to the Bank of England (BoE). estimates.

The BoE also forecasts that the UK will enter recession in the fourth quarter of 2022, while unemployment is expected to rise in 2023 as the bank pursues monetary policy to bring inflation back to its 2% target.

Amidst this looming recession and the BoE striking a delicate balancing act between controlling inflation and unemployment, Britain’s next Prime Minister has a difficult task.

Indeed, Britain’s cost-of-living crisis is dominating the ongoing Tory leadership election to determine Britain’s next prime minister, with rivals Rishi Sunak and favorite Liz Truss putting forward competing visions of how best to deal with the country’s financial woes.

Learn more: Crypto Champion Sunak meets Digital Internationalist Truss in the UK Leadership Race

But whatever the outcome of the race, the question of how the proposed tax cuts will be funded and whether or not the government will make further spending to cover soaring prices must be urgently addressed by anyone who takes the helm of British diplomacy and hops on 10 Downing Street next month.

Subscribe to the daily newspaper for all PYMNTS EMEA coverage EMEA Newsletter.

How consumers pay online with saved credentials
Convenience is prompting some consumers to store their payment information with merchants, while concerns about security are causing other customers to pause. For How We Pay Digitally: Stored Credentials Edition, a collaboration with Amazon Web Services, PYMNTS surveyed 2,102 US consumers to analyze the consumer dilemma and how merchants can overcome resistance.

Leave a Reply

Your email address will not be published. Required fields are marked *