People have been urged to put money aside for an uncertain financial future, but many are unaware of the effects inflation and tax may have on their savings, a new study has shown.
According to NS&I, nine per cent of people have no understanding of inflation, while nearly a third (31 per cent) said they knew the concept but were not aware of its potential effects on savings.
A further 28 per cent said they did not know how tax may impact their savings accounts.
John Prout, NS&I’s sales director, said, “It is concerning that many people don’t understand what inflation is, or how it might affect decisions about saving or spending money.”
He explained that £100 put away now will buy a little less this time next year, due to salary increases, rises in demand for products or falls in supply.
The figures may lead to concern that people trying to protect themselves against future debt during the predicted recession may be unaware of possible losses to their savings.
Up-to-date information on inflation can be found on the UK Statistics Authority website.
By Morwenna Kearns