Savers ignoring inflation rates

According to National Savings and Investments (NS&I), three out of four savers do not factor in inflation.

08:45 01 September 2005

According to National Savings and Investments (NS&I), three out of four savers do not factor in inflation.

It says as many as one in six are actually unaware of the effects of inflation, with one in ten believing it is only a concern for the well-off.

In the last six months figures for the levels of inflation-ignorance have risen.

"This downward trend is something of a worry," commented NS&I's marketing director, Karen Jones.

"Even though we are experiencing a period of relatively low inflation, people who invest their money for more than a few years in an account that doesn't protect against inflation could see the value of their money diminish as inflation takes its toll."

She added: "When it comes to saving for the future, the majority of people seem to be disregarding the impact that future inflation will have on their investments."

NS&I is therefore launching its 'Inflation-beating Savings', to help promote its unique range of Index-linked Savings Certificates.

Ms Jones feels the new savings products will help to "combat confusion and make it easier for savers to consider the affects of future inflation".

NS&I found that two thirds (67 per cent) of Brits readily confessed to not knowing that the current rate of inflation is 2.9 per cent (as measured by the Retail Price Index).