{"id":21713,"date":"2022-01-13T17:02:38","date_gmt":"2022-01-13T17:02:38","guid":{"rendered":"https:\/\/smh.group\/?p=21713"},"modified":"2023-02-15T13:43:04","modified_gmt":"2023-02-15T13:43:04","slug":"lessons-from-rising-inflation-and-interest-rates","status":"publish","type":"post","link":"https:\/\/devstagesite.co.uk\/smhgroup\/lessons-from-rising-inflation-and-interest-rates\/","title":{"rendered":"Lessons from rising inflation and interest rates"},"content":{"rendered":"<p><strong><span data-preserver-spaces=\"true\">As 2021 drew to a close, inflation finally forced the Bank of England&#8217;s hand. But what will higher rates mean for you?\u00a0<\/span><\/strong><\/p>\n<p><span data-preserver-spaces=\"true\">The November inflation figures, released in mid-December, once again exceeded the Bank of England&#8217;s (BoE) expectations. At the start of November, the BoE had said that CPI inflation was &#8220;expected to peak at around 5% in April 2022&#8221;. But six weeks later, it changed its tune: &#8220;Bank staff expect inflation to remain around 5% through the majority of the winter period, and to peak at around 6% in April 2022&#8221;.<\/span><\/p>\n<p><strong><span data-preserver-spaces=\"true\">So what does that mean to you?<\/span><\/strong><\/p>\n<ul>\n<li><span data-preserver-spaces=\"true\">The effects on your personal spending will fluctuate. Inflation is not constant across all goods and services. For example, November&#8217;s data showed that while overall inflation was 5.1% a year, in the health category prices rose only 1.4% across the 12 months, while for transport (for example those petrol prices and secondhand cars) the annual increase was 12.5%.<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">The buying power of your cash savings is depreciating fast. The Bank responded to the latest jump in inflation by raising Bank Rate from 0.1% to 0.25%. Viewed another way, over a year, a deposit of \u00a31,000 would earn \u00a32.50 (before tax) in interest at Base Rate, while current inflation would erode its buying power by about \u00a350.<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Your next pay rise probably won&#8217;t cover the erosion of buying power. The Bank&#8217;s forecast of an April peak for inflation \u2013 primarily driven by the next Office of Gas and Electricity Markets (OFGEM) utility price cap rise \u2013 will coincide with the increase in National Insurance contributions announced last September. For example, if you earn \u00a340,000 a year and, like many employees, your salary review takes effect in April, you will need a pay rise of 8.2% to maintain the buying power you had a year ago.<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Your insurance cover will need a review. If you have life assurance and\/or income protection that is not inflation-proofed, you will need to increase the level of cover to maintain the real value of your protection. With buildings and contents insurance, that often happens automatically and goes unnoticed.<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Any inheritance tax (IHT) liability on your estate has probably gone up &#8211; and with a <a href=\"https:\/\/devstagesite.co.uk\/smhgroup\/wills-probate\/\" target=\"_blank\" rel=\"noopener\">Wills and Probate<\/a> team in house, this is something we are expecting to see more and more. The current Chancellor has followed his predecessors&#8217; footsteps by freezing the IHT nil rate band. As inflation drives up asset values, such as your home, that could mean more of your estate is exposed to 40% tax.<\/span><\/li>\n<\/ul>\n<p><span data-preserver-spaces=\"true\">Whatever your situation, the team at\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/devstagesite.co.uk\/smhgroup\/financial-services\/\" target=\"_blank\" rel=\"noopener\"><strong><span data-preserver-spaces=\"true\">SMH Sheffield Financial Services<\/span><\/strong><\/a><span data-preserver-spaces=\"true\">\u00a0can help guide you through 2022. Drop us a line on\u00a0<\/span><strong><span data-preserver-spaces=\"true\">0114 266 4432<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a0or\u00a0<\/span><a class=\"editor-rtfLink\" href=\"mailto:info@smhca.co.uk\" target=\"_blank\" rel=\"noopener\"><strong><span data-preserver-spaces=\"true\">info@smhca.co.uk<\/span><\/strong><\/a><span data-preserver-spaces=\"true\">\u00a0if you need any assistance.<\/span><\/p>\n<h6><em><span data-preserver-spaces=\"true\">The value of your investment and any income from it can go down as well as up, and you may not get back the total amount you invested. Past performance is not a reliable indicator of future performance.\u00a0<\/span><\/em><\/h6>\n<h6><em><span data-preserver-spaces=\"true\">Investing in shares should be regarded as a long-term investment and should fit in with your overall attitude to risk and financial circumstances.\u00a0<\/span><\/em><\/h6>\n<h6><em><span data-preserver-spaces=\"true\">Tax laws can change. The Financial Conduct Authority does not regulate tax or benefits advice.\u00a0<\/span><\/em><\/h6>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>As 2021 drew to a close, inflation finally forced the Bank of England\u2019s hand. What will higher rates mean for you?<\/p>\n","protected":false},"author":4,"featured_media":21728,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[16],"tags":[238,191,58,12,237,239],"class_list":["post-21713","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial-services","tag-bank-of-england","tag-finance","tag-financial-services","tag-iht","tag-inflation","tag-interest-rates"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Lessons from rising inflation and interest rates - SMH Group Financial Services<\/title>\n<meta name=\"description\" content=\"As 2021 drew to a close, inflation finally forced the Bank of England\u2019s hand. 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