Inflation and interest rates – a guide for cash savers

What can be said about inflation and interest rates? The numbers speak for themselves. The Bank of England current base rate is 0.1% and target inflation rate is 2%.

In other words, if you were to start with £50,000, based on an inflation rate of 2% per year, the estimated value of your money in ten years’ time might be £41,017.

Even though the current inflation rate is 0.6% (down from 2.75% in 2017), it’s projected that it will increase at a steady pace in the next few years.

Source: Statista 2021

Inflation is defined simply as a ‘measure of the increase in the price of goods and services over time’. This is reflected in the increased cost of living. This not only affects our daily grocery expenses but can have a larger impact. Controlled inflation is useful for growth in the long term, but careful plann