Millions of private sector workers with a final salary pension face lower payouts after the Government announced plans to cut the rate at which their income rises each year.
Interest rates have been kept on hold today as policymakers maintain their "wait-and-see" approach ahead of government plans to tackle the UK's deficit.
Inflation is at a 19-year high meaning virtually every savings account would fail to keep pace with the cost of living were prices to continue rising at this rate.
The Bank of England should hike interest rates in the second half of 2010 and lift borrowing costs to 3.5% by the end of 2011 to control rising inflation, an economic report says today.
A sharp rise in the cost of living isn't generally good news, and April's Retail Prices Index (RPI) inflation measure, announced yesterday, shows a 19-year high of 5.3%.