Low inflation could leave millions facing pay freeze

Experts have said that millions of workers could see their pay frozen this year, following the lowest rise in the cost of living for almost 50 years.

The Office for National Statistics (ONS) yesterday said that the two key measures of inflation both fell in January. The official CPI (Consumer Prices Index) rate of inflation fell to 3%, while the RPI (Retail Prices Index) fell to just 0.1%.

According to The Telegraph, John Philpott from the Chartered Institute of Personnel and Development said: "Pay freezes will be the case for some workers. We are seeing the biggest downward pressure on incomes in the post-war period.”

A spokesperson for debt management company Gregory Pennington said that pay freezes would affect different people in different ways.

"Some people will get by just as well as they did last year, even if their pay is frozen,” he said. "For example, many homeowners have benefited from reduced mortgage payments in recent months. Their reduced monthly payments could offset any rises in other costs.

"However, other people may not fare so well. Those who haven`t benefited from the base rate cuts will still be facing rising prices – with no pay rise to help them cope.

"Regardless of their financial situation, it`s especially important that people are careful with their money during difficult times. Clearing (or at least reducing) their debts, for example, can make a big difference to their ability to survive the recession.”

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Gregory Pennington offer debt management plans as well as a range of other debt solutions. If you are worried about debt, contact one of our expert debt advisers now.