Wednesday, 28 September 2011

Inflation Steals £2,500 from Typical Savers in Slow Motion Bank Robbery

THE DAILY TELEGRAPH: The average easy access savings account has lost nearly £2,500 of its real value or purchasing power during the last decade, according to calculations by Yorskhire Building Society.

Inflation is the insidious enemy of savers because it stealthily reduces what their money will buy. But with the Government’s favoured yardstick, the Consumer Prices Index (CPI) rising at an annual rate of 4.5pc – and the Retail Prices Index (RPI) showing 5.2pc – many may underestimate the cumulative threat.

Simon Broadley of Yorkshire Building Society said: “With the average savings account standing at £11,648 this can have a significant effect on a person’s savings – especially over the long-term, given the current market.

“Over 10 years someone with the typical savings pot in a basic easy access savings account would have earned £1,624 in interest, leaving its nominal value at £13,272. However, for them to have the same spending power as when they invested – their savings would need to have grown to £15,700 – a difference of £2,428.”

Michelle Slade of the independent website Moneyfacts, added: “People can see the impact of rising prices on their everyday spending, but neglect to see the impact on their savings as the actual size of their savings pot is still seemingly growing. » | Ian Cowie | Wednesday, September 28, 2011