Rising inflation eroding savings is cause for concern for Moneywise users

26 October 2017

Over a third (35%) of Moneywise.co.uk users are concerned about rising inflation due to the negative impact it has on cash savings.

The Consumer Prices Index (CPI) measure of inflation rose from 2.9% to 3% in the year to September, according to the Office for National Statistics’ latest data.

This is its highest rate since March 2012.

But low interest rates means savings rates can’t compete with rising prices - just six accounts beat 3% inflation - meaning cash in accounts paying less than 3% is being eaten up.

A further 15% of those who answered our latest poll said they’re concerned about rising inflation because it’s eroding their spending power as the same goods and services now cost more, while 5% said they’re worried about rising inflation for other reasons.

However, September’s high inflation did bring some good news for retirees as it’s pegged to state pension increases. This means the state pension is likely to rise from £159.55 a week to £164.37 a week in the 2018/19 tax year.

The lifetime allowance for pension savers is also calculated using September’s rate of inflation, meaning a likely rise from £1,000,000 to £1,030,000 from April 2018.

This is reflected by the fact that nearly a third (31%) of those who voted said that while they’re pleased about the likely increases to the state pension and the lifetime allowance, they are worried about inflation’s upward trajectory.

By comparison, only 14% have no concerns about rising inflation.

See the pie chart below for the full poll results.

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