Rampant inflation forces Brits to dip into Covid-19 savings

Brits are unleashing the enormous stock of savings amassed over the course of the Covid-19 crisis to maintain spending amid soaring inflation, reveal fresh official figures released today.

Households are turning to drawing down savings due to the intensifying cost of living crunch stretching their budgets.

The combined £3.2bn jump in households savings over the last month was smaller than the £4.9bn monthly average increase registered before the pandemic, “implying that households have begun to draw down their “excess savings”,” Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said.

Dipping into Covid-19 savings illustrates “households [are] attempting to support their current level of expenditure while their real disposable incomes are being battered by high inflation, rather than a positive shift in consumers’ sentiment,” Tombs added.

UK inflation is running at the highest level in nearly 30 years, hitting 5.4 per cent in December.

According to the Office for National Statistics, real wages, which measures pay increases net of price rises, are falling, meaning consumers have less financial resources to meet spending commitments.

As a result, they are being driven to savings to plug spending deficits.