Rising inflation piles on further pressure

Today's announcement by the Bank of England that inflation hit 4.5 per cent in April, adds further pressure to the many households across the UK that have been struggling the rising cost of living.

Research from moneysupermarket.com reveals weekly outgoings for the average British adult have risen by £54 over the past six months. Perhaps more shockingly, almost a quarter of those surveyed (22 per cent) say they would be unable to cope if their monthly expenditure was stretched any further, as the cost of living has now become too high for them.

Aside from rising living costs, inflation is also having a huge effect on the nation's savings pots. To beat inflation, basic rate tax payers now need an account paying at least 5.63 per cent to gain benefit in real terms from their savings, increasing to 7.51 per cent for higher rate tax payers.

Kevin Mountford, head of banking at moneysupermarket.com said: "Consumers are not only battling rising day-to-day costs and a reduced level of disposable income, many are also having to deal with pay freezes, which means in real terms, their incomes are being reduced. Many families will feel like their finances are approaching breaking point, however, there are still small steps they can take to help them save some vital pennies."

The research also revealed that four in ten adults (40 per cent) have found the soaring cost of petrol, which has already seen a litre rise to above £1.33 for the first time ever, has had the biggest impact on their spending and budgeting over the last 12 months. A quarter (23 per cent) of adults say it is the rising cost of food and two in ten (19 per cent) say it is the rising cost of paying for utility bills such as heating which is causing the biggest strain.

Kevin Mountford continues: "For families struggling with day-to-day costs, spending wisely, using discount vouchers and shopping around for the cheapest deals on their borrowing and household bills should all be top priorities at the moment.

"For savers, the low number of products which currently offer a return above inflation, means keeping a closer eye on their interest rates. Being prepared to switch is now more important than ever. Even if savers can't beat inflation, the difference between the average and top paying rates is considerable, so switching to a better deal can help to limit the impact on their savings pots."