King calms family inflation worries


inflationWe've all felt the squeeze on our household budgets in recent months, with rising prices eroding the value of our savings and adding to the pressure on our wages.

And it seems prices have not finished rising just yet, as the UK's consumer prices index rate of inflation equalled its record high of 5.2% last month - but what does this mean for us?

Well, despite the somewhat daunting figure, Bank of England governor Sir Mervyn King has aimed to calm people's inflation fears, suggesting that prices should begin to drop in the early stages of the new year, meaning savings and budgeting can start to get back on track.

During a speech in Liverpool, Sir Mervyn said: "Increases in energy prices, import prices and VAT account for the current high level of inflation.

"Once the effect of these temporary factors begins to dissipate, inflation should fall back sharply early next year."

Weakening demand should lead to a drop in prices before too long, the financial expert added.

How are you having to alter your household budget to deal with high inflation? Share your tips with other families by writing to [email protected]