UK inflation has risen to 2.6% in the year to November 2024, driven by higher prices for fuel, clothing, and entertainment, according to the Office for National Statistics (ONS). This unwelcome news puts further pressure on freelancers and the self-employed already struggling with the rising cost of living.
“These new inflation figures should act as a harsh wake-up call for UK residents looking to save money going into 2025,” said Aatif Malik, CEO of Tax Accountant. “With interest rates holding steady amidst rising costs, it’s more important than ever to optimise savings strategies and explore higher-yielding accounts to protect and grow financial assets.”
The Bank of England is expected to maintain interest rates at 4.75% in its upcoming meeting on 19th December. “There is almost no chance of the Bank of England delivering another interest rate cut tomorrow,” said Paul Dales, Chief UK Economist at Capital Economics.
Financial gut punch
Paul Noble, CEO of Chetwood Bank, said: “This latest rise in inflation is a financial gut punch for Britons preparing for the year’s most expensive season.”
Noble continued, “It comes as no surprise following the uncertainty surrounding October’s budget announcement and could be a sign of a prolonged period of inflation above the government’s target. All eyes will now be on the Bank of England’s interest rate announcement on Thursday to see how they react to this news.”
“With inflationary pressure still unrelenting, consumers must be more proactive than ever about managing their money – missing out on competitive rates and leaving funds in old savings accounts, or their current account, is just leaving money on the table. Financial institutions must play their part by providing products and support that can help Britons navigate yet another tricky economic period.”
This means that while the cost of goods and services is increasing, the returns on savings are likely to remain stagnant. For freelancers and the self-employed, who often have less predictable income streams and fewer workplace benefits than employees, this situation can be particularly challenging.
Expert advice for navigating inflationary pressures
Sarah Coles, head of personal finance at Hargreaves Lansdown, advises to keep a close eye on their savings rates and be prepared to switch accounts to secure the best deals. She also suggests that now is a good time to fix savings for a year to take advantage of current rates.
“The savings market has been pretty solid for the past month,” says Coles. “It means there are still some strong rates out there, so if you have money you want to fix for a period, now is the time to do it.”
For those considering larger purchases, Coles suggests that there may be good deals available on big-ticket items like furniture and appliances due to falling demand.
Political responses and concerns
Chancellor Rachel Reeves acknowledged the ongoing cost of living challenges, stating, “Today’s figures are a reminder that for too long the economy has not worked for working people.”
Liberal Democrat Treasury spokesperson Daisy Cooper MP expressed concern about the impact of rising inflation on those already struggling with the cost of living crisis. She criticised the government’s decision to cut Winter Fuel Payments and raise National Insurance contributions, arguing that these measures will further exacerbate the financial burden on households.
“The government needs to finally see sense and reverse these short-sighted decisions or people will continue to suffer,” said Cooper.
Looking ahead
With inflation expected to remain high, freelancers and the self-employed will need to be proactive in managing their finances. Seeking expert advice, exploring higher-yielding savings accounts, and carefully considering major purchases are all essential steps in navigating these challenging economic times.
