🔔 Soaring inflation destroys the value of savings – new Inflation Calculator shows the damage to your wealth

Author: Anna Bowes
15th December 2021

Figures released today from the Office for National Statistics (ONS) saw the Consumer Prices Index (CPI) inflation figure soar to 5.10% in the 12 months to November, up from 4.20% in October. This is the highest CPI 12-month inflation rate since September 2011, when the rate was 5.20%

The highest upward contribution to the inflation rate for November was the price of fuel at the petrol pumps. In November this year the average petrol price was 145.8 pence per litre. In November 2020 this average price was just 112.6 pence per litre.

Coupled with this, the price of second hand cars rose significantly again.

But it’s not just transport that has contributed to this rise in inflation. Clothing and footwear, food and non alcoholic drinks and furniture and household goods have all seen larger price rises in November 2021 than they have for the previous three years.

While this is probably no surprise as you are likely to be feeling the effects whenever you purchase anything, do you realise just how devastating inflation can be on your cash savings?

It’s been a while since there have been any savings accounts available that beat or even match inflation, but this doesn’t mean that you should just throw in the towel. Shopping around for the best rates you can find for the money that you need to keep in cash is really important as although it won’t eliminate the damage, it can reduce it.

We’ve produced a brand new, easy to use inflation  calculator to show the destructive effect inflation has on your savings and how it destroys your wealth and spending power without you even realising. Inflation is a silent thief and our calculator will show you how much you could be losing out by. To illustrate this very point.

If you have a deposit of £10,000 sitting in an account with your high street bank earning 0.01%, after five years with an inflation rate of 5.10%,  the real value of your money will have fallen to £7,802 – meaning the loss of your spending power due to the erosion of inflation is £2,203.

Over 14 years, your money will have more than halved in real terms.

Have a go with the calculator today to see how inflation might affect your savings.

If you’re worried about rising inflation and think you might be holding too much in cash, perhaps you'd like to explore other options, so why not get in touch. We’re currently offering all those with £100,000 or more in savings, investments or pensions a FREE financial planning review with one of our TPO colleagues, worth £500. You can find out more here.