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Media centre /
Press releaseBRITISH SAVERS WISING UP TO INFLATION06 April 2004More people becoming aware of inflation-beating savingsBritish people are rapidly becoming smarter when it comes to saving, with a greater number taking inflation into account when they choose a home for their money, according to research from National Savings and Investments (NS&I), the government-backed savings and investments provider. The number of people who said they take inflation into account when looking to save has increased from less than one in five people (19%) to more than one in four (27%) in the six months from August 2003 - when research was first carried out - to February 2004. At the same time, the number of people who said they don't take inflation into account has dropped significantly from 74% (three-quarters of savers) to 64%, or two-thirds. "Do you take inflation into account when looking to save in a particular product?"
Index-linked Savings Certificates The research bears out the growing level of interest in NS&I's Index-linked Savings Certificates (ILSC), the only savings product on the high street which offers inflation-beating tax-free returns. The total amount invested by customers now stands at just over £8 billion. Younger getting smarter? There has been a significant increase in the number of younger people getting in on the act. In August 2003, just 15% - or less than one in seven - of 25-34 year-olds said they did take inflation into account but, by February 2004, this number had almost doubled to 27%; more than one in four people. And the number of 45-54 year-olds who want to protect their savings against inflation has increased from 22% (nearly one in five) to 33% (one in three) over the six-month period. In August 2003, 30% of 55-64 year-olds said they took inflation into account and, by February 2004, this number had gone up to 32%. Regionally Across the UK there have been some noticeable increases in the number of people who say they take inflation into account when saving. In August 2003, just one in 11 (9%) of people in Wales and the West of England said they considered inflation but, by February 2004, this figure had more than tripled to 31%, or one in three people. The worst culprits in August 2003 were in the South East and East Anglia, with 78% (over three-quarters) saying they didn't account for inflation. By February 2004, this figure had dropped to 65% (one in three). The offenders in 2004 are the Scots, with 67% not taking inflation into account, but despite this, the figure has dropped from 2003 when 75% of Scots said they didn't take inflation into account when saving. Broadly, the number of people who say they do take inflation into account has increased from one in five (18%) to one in four (24%) in the North, one in five (19%) to one in four (26%) in the Midlands, and one in five (20%) to almost one in three (30%) in the South. How do Index-linked Savings Certificates work? Index-linked Savings Certificates are a three or five-year investment, during which the money invested earns a return directly linked to the headline rate of inflation, otherwise known as the Retail Prices Index (RPI), plus guaranteed rates of interest. This means the returns outstrip inflation and, as an added bonus, they are tax-free. Anyone aged seven or over can invest from £100 up to £10,000 per Issue (a new issue becomes available each time NS&I changes the interest rate on ILSC). Rates of return Because ILSCs offer a tax-free return that beats inflation, it makes them particularly attractive for higher and basic rate taxpayers.
(These figures assume the RPI rises by 2.5% each year for the next five years and current rates of tax) An 'obvious place to save' Gill Cattanach, NS&I marketing director, said: "Clearly, many taxpayers of all ages are showing an increased awareness of the effects of inflation and are beginning to see the importance of putting money in a secure investment that offers tax-free, inflation beating returns. "For many people, our Index-linked Savings Certificates are becoming an obvious place to save where the interest on their investment is safe from being eroded by inflation or taken away by the taxman." ENDS Notes to Editors1. The National Savings and Investments survey was conducted by TNS via PhoneBus between 6-8 February 2004. The sample size was 1,011 adults. 2. The rate of inflation is calculated using the Retail Price Index (RPI). The RPI measures the average change from month to month in the prices of goods and services purchased by most households in the United Kingdom (Office of National Statistics). 3. National Savings and Investments is one of the largest savings organisations in the UK, offering a range of savings and investments products to 30 million customers. All products offer 100% capital security, because they are backed by HM Treasury. 4. NS&I is the exclusive sponsor of The Classical BRIT Awards, the UK's premier classical awards show, at the Royal Albert Hall on 26 May 2004. 5. Further information and digital images are available from the NS&I media team. An ISDN line is available for interviews. NS&I Media Team
Media team The numbers below are for media use only. Customers wishing to contact NS&I can find details here.
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