Inflation: the silent snack thief
Lesson 7 of 12 in our free Saving & Emergency Funds guide: a 5-minute money game with the key points below.
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Questions you'll answer
Inflation is 3.1%. Your £1,000 earns no interest for a year. Roughly what is it worth in last year's prices?
Inflation is 3.1%. Which savings rate keeps your money's buying power growing?
Quick facts
- Myth: “Cash under the mattress is safe from inflation.” — It's safe from bank failure, but inflation still eats its value — and burglars exist.
- Fact: “Real return ≈ interest rate minus inflation rate.” — A handy rule of thumb for whether you're gaining or losing buying power.
- Myth: “Inflation means every single price rises by the same amount.” — It's an average. Some things rise faster, some fall.