In our weekly series, readers can email any question about their finances, to be answered by our expert, Rosie Hooper. Rosie is a chartered financial planner at Quilter Cheviot Financial Planning and has worked in financial services for 25 years. If you have a question for her, email us at [email protected]
Question: Inflation is still high at 3.4 per cent and interest rates have not budged. How can I protect my money?
Answer: This week’s figures show inflation remains stubbornly high, particularly for services, food and energy. That has prompted the Bank of England to keep interest rates at 4.25 per cent, holding firm after the cut in May, as policymakers wait for clearer signs that price pressures are truly easing.
At the same time, tensions between Iran and Israel have raised fears of another spike in fuel costs that could feed back into inflation and hit household budgets. The combination of sticky domestic inflation and geopolitical uncertainty is keeping markets on edge and making proactive financial planning more important than ever.
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For savers, the outlook is not all bad. With interest rates still relatively high, many easy-access and fixed-rate accounts are offering between 4 and 4.5 per cent, although the very best deals are starting to disappear.
If you have got cash sitting in a low-paying account, now is the time to switch. It is also worth considering money market funds within ISAs and pensions, which aim to provide better returns on your cash without tying it up for years.
Borrowers, on the other hand, remain under pressure. If you have a mortgage deal coming to an end, or you are sitting on credit card or personal loan debt, it is important to get ahead of it. Even a modest increase in your mortgage rate can add hundreds to your monthly payments.
It is worth speaking to a broker early or checking whether overpaying your mortgage makes sense, particularly if your savings are earning less interest than you are being charged.
Then there’s the day-to-day squeeze. Despite inflation climbing down from double-digit growth just putting food on the table or paying energy bills is becoming increasingly costly.
Reviewing your budget can make a big difference. Start by checking whether you are still paying for subscriptions you no longer use, whether your insurance and utility bills are competitive, or whether changing your supermarket habits could free up a bit more each month. Small savings really do stack up over time – especially when costs are creeping higher in the background.
If you are investing, it is understandable to feel nervous. High interest rates tend to put pressure on markets, and geopolitical events like those unfolding in the Middle East only add to the uncertainty.
But unless you are planning to access your investments in the short term, reacting emotionally can do more harm than good. Staying invested, keeping diversified, and sticking to a long-term strategy are still the most reliable ways to beat inflation over time.
If you are contributing monthly, market dips can actually help by allowing you to buy more for the same amount.
Ultimately, while none of us can control interest rates or global tensions, we can control how we respond.
That means checking your savings are working hard, avoiding high-cost debt where possible, making small but consistent improvements to your budget, and investing with a cool head. And if you are not sure what to prioritise, this is the kind of environment where speaking to a financial adviser can help bring clarity.
This is not an easy moment for household finances. But with a few smart moves, it is possible to steady the ship even when the headlines feel anything but calm.
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