Inflation figures not good news for some NS&I savers.

martinman3

EalingSaver wrote: »

Not what I meant. I know they haven't dropped below their last anivseray value, but their cash in value now is almost certainly lower then it would have been say 1 month or even 2 months ago. e.g. if they were for example at aniversary plus 8 months now. Sinply because the calculation of the index part would have been substantially higher.

I see.
What you do now would then depend on how long your term is and if you think that inflation will increase in the later years of the cert.

Lansdowne

EalingSaver wrote: »

(And there are a few twists about which RPI rate is used, which I think if I have it right if you cash in January, you don't get Dec rate applied you get Jans, but only for the period up to end of Dec).

Again without taking my word as Gospel:
Interest is given for complete months. If you bought it on August 18th, and cash it in on February 18th, that is 6 months and the RPI "applicable to" February is used.
If you bought it on August 18th, and cash it in on February 17th, that is only 5 months and the RPI "applicable" to" January is used.

The RPI applicable to February is that published (recently) in January, based on prices in the shops in December. The RPI applicable to January is that published in December basd on prices in November.

Therefore, anyone thinking of cashing their Certificates before maturity, should do so before the purchase date comes round in February. They will get B/A where B=216.0 rather than B/A where B=212.9.

I have certificates maturing on February 10th. Even after the 1.21% bonus is added on maturity, I will be better off cashing them in now (i.e. before February 10th) and lose the 1.21% but gain the 1.4% difference between 216 and 212.9.

Ruy

If you bought it on August 18th, and cash it in on February 17th, that is only 5 months and the RPI "applicable" to" January is used.

Agree with 5 months ( as a month would only be completed on the 17th ) but RPI applicable to Feb would still be used, wouldn't it according to T & Cs 16 part (c) ?

16. An index-linked value will be calculated as V x B/A where:

(a) 'V' is the value of the Certificate at the beginning of the index-linked period (this will be the purchase price or the value at an anniversary date);
(b) 'A' is the Index figure applicable to the calendar month in which the first day of the index-linked period falls (this day will be the purchase date or an anniversary of it); and
(c) ‘B’ is the index figure applicable to the calendar month in which the day after the final day of the index-linked period falls. This will be the maturity date, an anniversary date, or the day after the last completed month for which index-linking is earned.


Sorry, re-reading it ,I'm wrong & Landsdowne is correct. The last completed month would be that of Jan & hence the RPI applicable is to Jan for 'B'

MiserlyMartin

What is the penalty for cashing in a year or so early on a a 3 year cert>?

nrsql

Don't think there is any. It's taken care of by the increased return in the third year which you lose out on.

With the decrease in value of sterling and hence increased cost of imports (which I expect to get worse) I would expect an increase in inflation. Think this is a temporary phase.

rarrarrar

Housing costs are included in the RPI, this is mainly why the index has fallen recently.

The problem for many people is that the Media etc talk about RPI as a % change over the last 12months.
RPI is , as has been stated here, an index of costs for a particular month and this is the value used by inflation linked products ; difficulty in finding the table of RPI values doesnt help either.

MiserlyMartin

Yes this is my gut feeling too. Inflation will rise. Petrol is up again already.

john_s_2

rarrarrar wrote: »

difficulty in finding the table of RPI values doesnt help either.

The ONS website wouldn't win any prizes for ease of navigation. But persistence has its rewards.

http://www.statistics.gov.uk/StatBase/tsdataset.asp?vlnk=229

You can view the complete index from 1948 from the above link, or download it as a CSV file. I promise both links are easily findable on that page!