Pennies are at risk of being scrapped after it emerged the Treasury had no plans for more copper coins to be minted in the coming years and the Royal Mint has not been asked to produce new coins of any kind this year.
One former Conservative pensions minister warning the cost of many basic items would be rounded up to the higher full pound amount and hit vulnerable older people hardest.
There are few products you can buy with a single 1p or 2p coin but they are often given as change for items that cost £1.99.
No new 1p and 2p coins are expected to be ordered in the coming years with proposals being worked on to be put to ministers over the future of the coinage
Cash made up just 12 per cent of all payments last year, according to figures published by industry body UK Finance. By contrast almost four in ten payments were contactless
Former pensions minister Ros Altmann said: ‘[Removing them from circulation] will just lead to higher prices in the shops. For those on low incomes who use cash, especially the poorest pensioners, every penny counts.
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‘The cost of many basic items are often just under a whole pound to make them more attractive but either the prices will be rounded up to the higher full pound amount as change can’t be given or those using cash will have to pay the whole pound which will cost them more.’
The Federation of Small Businesses has also warned that card providers could charge higher prices if consumers have less choice over how to pay.
Craig Beaumont, from the FSB, added: ‘Due to inflation, there will inevitably be a moment when – just like the halfpenny – the lowest denomination of coins are phased out of the system.
‘The fact that 1ps and 2ps already had to change their metal content due to their inherent worth exceeding their face value shows the likely direction of travel. But it will be a case of when – and [that’s] when consumers are ready.’
If the coins are scrapped, this would mark the first such change since 1984 when the halfpenny coin was taken out of circulation.
The decision, by then chancellor Nigel Lawson, was made when the coin became more expensive than its value to mint.
