Focus on Personal Finance as UK Inflation Climbs

Amid skyrocketing inflation and rising food and fuel prices, terms like financial literacy and spending management have emerged as some of the biggest buzzwords in recent months.

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

In the UK, for example, the Office for National Statistics recently announced that the Consumer Price Index (CPI), a well-known indicator of inflation, had risen 10.1% in the year to July, indicating a rate double-digit inflation for the first time since 1982.

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

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Digital early banks like Monzo, Revolut and Starling have stepped in by rolling out new features that help customers manage their money more effectively. These smart tools have been designed to give users a clear picture of their spending patterns so they can save and budget using detailed expense reports.

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Related: Revolut’s ‘Pockets’ tool aims to help people organize payments

These digital banking apps can also provide notifications to help 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.

A difficult task awaits the next UK Prime Minister

For Brits living in destitution, no budget amount is likely to fully absorb the impact of price increases that have already led to the average UK grocery bill rising by £380 year-on-year (YoY) .

Read more: UK shoppers feel pressured as average annual grocery bill rises by £380 year-on-year

But to provide some relief, the country’s Department for Work and Pensions (DWP) stepped up last month and made the first installment of a two-part payment to recipients of disability and means-tested benefits, as well as to retirees. Eligible citizens received a direct bank transfer of up to £326 ($384), with a second payment expected in the fall.

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

However, more will be required to help struggling British households stay afloat, and sound financial management will become increasingly important in the coming months.

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

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

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Amid this looming recession and the BoE playing a delicate balancing act between controlling inflation and unemployment, the next UK Prime Minister has a difficult task.

Indeed, the UK’s cost of living crisis has come to dominate the ongoing Tory leadership election that will determine the UK’s next Prime Minister, with rivals Rishi Sunak and favorite Liz Truss presenting conflicting views on the best way to handle the country’s financial struggles.

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But no matter how the race plays out, whoever takes the helm of British diplomacy and moves to 10 Downing Street next month.

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