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.”