The Office for National Statistics has recently released information which has shown that the real income of people has fallen to its lowest point in seven years. This is largely because inflation rates are increasing at a far greater rate than people’s incomes.
People are being urged to open a savings account in these times, even if they don’t have much money to put into it, because it provides an excellent financial buffer for when things go wrong. If you are considering opening a savings account then it would be a good idea to look at the various offerings on the market, and one organisation that compares these is Money Expert.
In the first quarter of this year, people’s real incomes fell by half a percent, which has meant that households have the lowest power to spend that they have had since 2005.
A spokesperson from the Office for National Statistics has said “It is not just inflation that is causing the amount of real income people have to fall, but also there has been an increase in tax, and a fall in the number of benefits that are available to people. If you look at things overall, households right now facing the tightest economic situation that they have since the 1920s.
“People are facing a great deal of hardship and are being dragged down by overall economy. Instead of easing the burden as the government should, they are actually making things worse by cutting the tax credits that people are entitled to, and increasing the rate of VAT.
We are encouraging people to take various steps, such as set up a savings account, or budget more carefully, in order to weather the economic downturn better. Saving money is an essential part of life when disposable incomes have fallen so much.”