What does inflation mean for your money?

What is inflation?

Inflation is the term given to describe rising prices. The Office for National Statistics calculates the rate of inflation by comparing the average cost of goods and services (or basket) of items today, against their price this time last year.

So, if a pint of milk cost £1 this time last year, and costs £1.03 this year, then the rate of inflation is 3%.

Can rising inflation affect your finances?

The rate of inflation affects the value of your money. If prices are going up, you won’t be able to buy as much with your earnings or savings.

This illustration shows how inflation can impact your savings if inflation was at a rate of 9.9%.

You can find the latest inflation information at the Office for National Statistics. It is also worth remembering that the rate of inflation can rise and fall.

Is it bad news when inflation rises?

The UK has a year on year inflation target of 2%. Controlled inflation can be positive for the economy, but if it jumps too quickly or unpredictably, it can cause concerns. With a rise in inflation, you may find it difficult to know how much you should spend, save or invest.

Try our inflation calculator

If you want to find out how inflation will affect your savings, enter an amount, along with the current inflation rate. We’ll then tell you the future buying power of your money, based on the rate remaining the same for the next year.


For information, the inflation rate at September 2022 is 9.9%*

My result

Based on these details, we estimate that your cash will have the buying power of ##value_inf## in a year’s time. This is based on an inflation rate of ##inflation##%.

The calculator is an estimate. It does not include interest you could earn over time. The rate of inflation can rise and fall.

* Source: Office for National Statistics – Consumer price inflation. For an up-to-date view, visit the Office for National Statistics.

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