High inflation hits workers and savers

Employment is at a record high, but UK workers are starting to feel the squeeze as wages fall below inflation for the first time since 2014.

Inflation has gone up, now at its highest level in five and a half years, in part, due to the Brexit-related fall in the value of sterling, but the fall in wage growth is unusual as it occurs at a time when employment is at a high. When prices rise faster than wages, it reduces spending power and puts pressure on household finances.

Keeping up with inflation

If you earned £539 per week (the 2016 median gross weekly earnings for full-time employees) your pay next year would need to increase by another £16.17 each week to keep up with the current inflation rate of 3%. Unfortunately, the current average pay growth of just 1.8% means your earnings will actually be worth £6.47 less each week.

As well as your wage-packet, rising inflation could also erode the value of any savings you have on deposit, leading some to consider investing, where there is potential for your money to work harder. If you find yourself in this situation, we can help by introducing you to Newcastle Financial Advisers, who are available in all Newcastle Building Society branches.

Designing your investment strategy

After establishing and agreeing your attitude to risk, Newcastle Financial Advisers will work with you to create an appropriate investment strategy - one that aims to maximise returns while maintaining the right level of risk for you.

As well as recommending the most appropriate product or tax 'wrapper' (a specific type of tax efficient investment) from the range available to Newcastle Financial Advisers, who will also recommend the most appropriate fund or portfolio of funds.

Recommendation will also take into account a number of other factors, including:

• Your objectives for the investment

• Your personal circumstances

• The timeframe over which you intend to hold the investment or pension

 • The amount of money you have available to invest

• Other investments that you already have

With so many investment options available and the effects of inflation erosion posing a risk to your savings, the hardest part can be deciding which route to take.

Newcastle Financial Advisers follow a clear and thorough process to clarify exactly what you need from your investments and how much risk you're prepared to take. Their approach will help you get a solution that matches your needs – today and in the future.