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Wide spread worry over impact of inflation

Wide spread worry over impact of inflation

Category: Money

Updated: 11/07/2011
First Published: 11/07/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Ahead of tomorrow's latest figures on inflation, new figures have revealed widespread worry over the effects it is having on people's finances.

The current rate of Consumer Prices Inflation (CPI) is 4.5%, more than twice the Government's long term target of 2%.

The Bank of England has said that inflation is unlikely to fall substantially during the rest of 2011 and could rise to 5%.

And research from Post office Savings has found that more than nine in ten (93%) people in the UK are worried about the impact it is having on their money.

The combination of relatively high inflation and rock bottom interest rates has hit savers in the pocket over the last couple of years.

Last week, the action group Save Our Savers wrote to the Bank of England to implore them to increase rates, claiming that savings pots have been eroded by tens of billions of pounds.

It said it took the decision to highlight 'the pain being endured by savers and those on fixed incomes'.

In a letter to all nine of the rate setting committee, the group said: "Inflation has reduced the real value of the nation's cash savings by more than £50 billion over the past 12 months."

Figures show that a third of people are saving regularly with another third saving where they can, but the Post Office's director of savings has urged them to ensure they are placing their funds in a competitive account.

"With inflation currently higher than the interest offered by many savings accounts, people may find they're effectively losing money on their savings by not seeking out an account that offers a real return," said Richard Norman.

To get your search for a super savings account under way, search the Moneyfacts.co.uk Best Buy pages.

Find the best savings rates for you - Compare savings accounts

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