Inflation remains steady - so why does everything still feel so expensive?

The latest stats are in: inflation stayed put at 3.4% in May.

But if your budget still seems stretched, you’re not imagining it. That’s because prices are significantly higher than this time last year - on average, you're paying 3.4% more for a range of goods and services.

Here’s what today’s announcement means for your money, and what you can do to keep your finances on track.

What’s driving price rises?

Price rises slowed in a few areas, mainly transport, thanks to cheaper airfares and petrol. But the big one that’s still climbing? Food. It’s up 4.4% compared to this time last year. That’s a hefty jump when you’re already counting every penny.

And even though the overall inflation figure remained steady, it’s still well above the Bank of England’s 2% target.

What about interest rates?

The Bank of England is meeting tomorrow (Thursday, 20 June), and they’re expected to keep interest rates at 4.25% for now. They want to make sure inflation is on a downward trajectory before they cut rates.

That means:

• Borrowing’s still expensive - mortgages rates won’t fall just yet.
• Savings might look tempting, but with inflation still at 3.4%, your money’s losing value unless your interest rate beats that.

So why does it still feel so tough?

Because for most of us, it is.

If your income isn't increasing at least inline with inflation, you're going to feel worse off than this time last year.

What you can do right now

Here are a few things that can help while we wait for inflation to come back under control:

1. Check your benefits - Billions of pounds in support goes unclaimed every year. Use our benefits calculator to make sure you’re not missing out.
2. Review your spending - Our budget planner can help you spot where your money’s going and where you might be able to cut back.
3. Work out if your mortgage will be affected - If you’re on a fixed-rate mortgage, nothing changes for now. But if you’re due to remortgage soon, it might be worth getting advice from a broker.
4. Tackle problem debts - If rising prices have pushed you into unmanageable debt, we can help you find a way out with debt advice that suits your situation.