Inflation rate and savings

Ciaran124_2

Hi there I have to again recently reading about the inflation rates and how the top saving and isa are deceasing your spending power. I know this and sort of understand how this would happen. E.g costs of shopping and petrol increasing over time.

But how or where do you find out what the current inflation rate is?

Also is this always the case that inflation is always or nearly always greater than the best saving accounts?

Thanks for anyone willing to answer and sure this has been asked before somewhere.... so so Sorry :A

Lokolo

There are 2 types of inflation; RPI and CPI.

http://www.statistics.gov.uk/cci/nugget.asp?id=19

You can see the rates here.

MoneySaverLog

Ciaran124 wrote: »

Also is this always the case that inflation is always or nearly always greater than the best saving accounts?

Thanks for anyone willing to answer and sure this has been asked before somewhere.... so so Sorry :A

Not at all there have been periods of deflation, and at some points high interest rates above 10%.

Inflation and Interest rates are like a seesaw, it's a balancing act between the two, and right now inflation is overbalanced. It has to fall for interest rates to rise.

Ciaran124_2

Thanks both of yous for the help think Im a bit more clear now.

So currently Im in Santander Flexible 3.3% ISA. Would that earn me more interest than NS&I - 5 years but allows access. Tax Free RPI inflation + 0.5% AER. cause this is simply an isa set up by the government in a way and you can take your money out of the account after a year?

By the way I think that yes it is near enough impossible because of inflation rate changing and so on. More just wanna know your opinions and thoughts? :money:

Ark_Welder

Ciaran124 wrote: »

So currently Im in Santander Flexible 3.3% ISA. Would that earn me more interest than NS&I - 5 years but allows access. Tax Free RPI inflation + 0.5% AER. cause this is simply an isa set up by the government in a way and you can take your money out of the account after a year?

By the way I think that yes it is near enough impossible because of inflation rate changing and so on. More just wanna know your opinions and thoughts?

NS&I certificates are tax-free, but they should not be confused with an ISA. They're two different types of beast.

The Santander offering and the NS&I I-L are addressing two different scenarios: Santander will track the Bank of England base rate for one year, with a bonus of 2.8%, and after the year the bonus will be gone; the NS&I I-L will track the future inflation rate.

So which to go for depends upon whether you expect the base rate to move higher (and when) and whether you expect the rate of inflation is likely to be over the next year. Which do you fear missing out on the most? That might be your deciding factor.

I think that the base rate will not change until sometime next year, and that the rate of inflation over the next year will be lower than the year gone. But when and by how much - and for both cases - couldn't guess at.