Inflation pressures continue to strike a duel blow to both monthly budgets and the real value of savings

by | Jan 21, 2023

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Jenny Holt, Managing Director for Customer Savings and Investments at Standard Life, comments on 10.5% December CPI.

“Inflation isn’t going away quickly, running to double-digits for the fourth consecutive month, and with the cost-of-living crisis entering a second year the impact on household savings has started to kick-in, in earnest. 

“Even if, as forecast, inflation subsides gradually through the year and annual inflation for 2023 comes in around 7%- well below the current level- £10,000 saved in a best buy easy-access cash-based savings account today, earning 3% interest, would be worth around £9,580 in real terms by next January. This in anyone’s money is a significant loss of purchasing power at a time when many household staples are also doubling in price.”

 Impact of annual inflation on £10,000
1£        10,094  £          9,991  £          9,888  £          9,785  £          9,682  £          9,579  £          9,476  £          9,373  £          9,270  
2£        10,189  £          9,982  £          9,777  £          9,575  £          9,374  £          9,176  £          8,979  £          8,785  £          8,593  

*The above table is based on savings of £10,000 earning 3% interest in an easy access cash-based savings account


“These figures highlight the importance of ensuring your savings are working as hard as possible for you. For those able to take a longer-term view, putting cash into investments via an ISA or pension provides the potential for returns that can match- or even beat- inflation over the longer term as well as additional tax efficient benefits.”

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