Inflation 'reducing the value of savings'

By Sarah Engle, Fri 18 Feb 2011 - Published in Banking

The recent increase in inflation has reduced the incentives for Brits to save, according to one commentator.

Earlier this week, the Office for National Statistics revealed that the consumer prices index increased to four per cent in January, rising from 3.7 per cent in December.

Commenting on the report, moneymagpie.com founder Jasmine Birtles said that this could represent "quite a blow" to those trying to put aside money as it essentially reduces the value of their cash.

"With the new figures on inflation - in other words how much prices are going up - it just shows that their savings are worth even less than they were a month ago or so," she continued.

Ms Birtles also recommended that people look into alternative savings vehicles, such as funding circles or peer-to-peer lending websites, as these can offer better rates of interest that allow savers to offset the effect of inflation.

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