“Sticky inflation”: What it means for your finances as a woman and how to take charge

In April, inflation rose to its highest rate in more than a year.

According to data from the Office for National Statistics (ONS;16 July 2025), UK inflation rose 3.6% in the 12 months to June 2025 – the steepest rise since January 2024. Moreover, the Bank of England (BoE; 8 May 2025) has said it expects this figure to increase temporarily to 3.7% later in the year.

While inflation has fallen significantly from its October 2022 peak of 11.1%, it has remained stubbornly higher than the government’s 2% target for most of the past four years.

Keep reading to learn how this “sticky inflation” could affect your finances as a woman and discover practical tips for protecting your wealth.

Women may be more vulnerable to the negative financial effects of inflation – here’s why

As a woman, you may find that your finances are hit harder by sticky inflation than a man’s due to a combination of economic, social, and cultural factors.

For example, figures from the ONS published by the New Statesman (22 August 2022) show that between June 2020 and June 2021, products and services marketed at women rose more than those targeted at men.

The chart below shows how this “pink tax” on everyday essentials could contribute to a higher cost of living for women.

Source: New Statesman analysis of ONS data (22 August 2022)

Additionally, women may be less likely than men to receive a pay rise that matches or exceeds the rate of inflation.

Research published by HR World (29 March 2022) shows that in 2022 (during which inflation peaked at 11.1%),  just 14% of women compared to 22% of men saw their salaries rise in line with or above inflation.

Moreover, a Glassdoor poll reported by Fortune (18 March 2025) has revealed that only 36% of women feel comfortable asking for a raise, compared to 44% of men.

How sticky inflation could affect your finances

When inflation remains persistently above the government’s target rate, this could affect your finances in several ways, including:

• Increasing expenses – During the cost of living crisis (which began in 2021 in the UK), you’ve likely noticed the effects of inflation on the price of goods and services you buy. Although the rate of increase has eased, prices remain elevated due to sticky inflation.
• Eroding savings – If inflation outpaces the interest rates offered by your savings accounts, the real value of your cash declines. This risk may be heightened when inflation remains above the government’s target for an extended period, as it has in recent years.
• Escalating borrowing costs – A common tactic the BoE uses to combat sticky inflation is keeping interest rates higher for longer. This could mean that any loans, mortgages, and credit card debt you have may become more expensive. For example, if you have a variable-rate mortgage or reach the end of your fixed term, you might see your monthly repayments increase.
• Reducing purchasing power – As the cost of goods and services increases in line with inflation, you may notice that you can’t buy as much with your money as you used to. This could make it harder for you to maintain your desired standard of living, or you might struggle to save and invest as much as you’d like to for the future.

But it’s not all doom and gloom. There are some simple yet effective ways to protect your finances against sticky inflation and stay on track to achieve your long-term goals.

Practical ways women can protect their wealth from higher inflation

Here are several strategies you could use to mitigate the detrimental effects of sticky inflation.

Review and adjust your budget

Regularly reviewing your finances might allow you to adjust your spending in line with your current income and essential expenses.

This is a crucial step towards safeguarding your financial wellbeing from the effects of sticky inflation in both the short and long term.

Invest in the stock market

As you read above, inflation may erode the real-terms value of your cash savings over time.

Indeed, a Schroders (14 March 2024) review of almost 100 years of stock market data found that cash has around a 60% chance of beating inflation, however long you save for. In contrast, the likelihood of shares beating inflation increases the longer you remain invested, reaching a 100% success rate over a 20-year horizon.

The chart below, created using FE Analytics (24 June 2025), compares the 20-year performance of higher-risk investments (blue), mid-risk investments (green), and UK inflation (red) between 2005 and 2025. As you can see, investing – even with a mid-risk approach – has consistently outpaced inflation.

Source: FE Analytics (24 June 2025)

So, while it may be useful to keep some cash savings to cover short-term and one-off expenses, investing for long-term growth may help you protect your wealth from higher inflation.

Maintain an emergency fund

Keeping some easily accessible cash reserves to cover unexpected costs could provide valuable peace of mind during uncertain economic times, including periods of sticky inflation.

A common rule of thumb is to save enough to cover between three- and six-months’ worth of essential expenses – such as your mortgage and food bills.

However, it’s important to factor in your specific circumstances and needs. For example, if you live in a single-income household, work on a freelance basis, or have dependants, you may feel more comfortable with a larger financial buffer.

Remember to regularly review your savings account and shop around to ensure your money is earning the best available interest rate.

Get in touch

I specialise in supporting women with their financial planning needs at all stages of their lives.

If you’d like to learn more about how you can keep your financial plan on track during periods of sticky inflation, I’d love to hear from you.

To find out more, please get in touch by email at lottie@truefinancialdesign.co.uk or call 03300889138.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

All information is correct at the time of writing and is subject to change in the future.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. 

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.