Why inflation matters
As we all know, prices usually go up rather than down. Over time, rising prices eat into the value of your savings. In three, five or 10 years time, you won’t be able to buy as much with £100 as you can today.
That’s why inflation matters.
What can I do about it?
The good news is that you can protect your savings from inflation and earn guaranteed interest on top – with inflation-beating savings from National Savings and Investments. And what’s more, they’re tax-free so you get to keep all the returns. "Tax-free" means you don't have to pay any UK Income Tax or Capital Gains Tax.
Our inflation-beating savings are known as “Index-linked Savings Certificates”.
Invest today and you’ll have:
- inflation-beating returns
- no tax to pay
- a choice of investment terms
The sure way to beat inflation
This graph shows how Index-linked Savings Certificates have grown ahead of both the rate of inflation and an average high street savings account over the last 10 years.
How we measure inflation
We use the Retail Prices Index – known as the RPI. The RPI measures the average change in the prices of goods and services bought by most households in the UK. It is compiled and published monthly by the Office for National Statistics (ONS).
You may have heard of another measure of inflation called the Consumer Prices Index, or CPI. The Government now uses the CPI for its inflation target, although the RPI is still used, for example, for index-linking of pensions.
What’s the difference between RPI and CPI?
The RPI includes housing costs and council tax, and is calculated in a different way, so it tends to be higher than the CPI. NS&I has always used the RPI to calculate increases in the value of Index-linked Savings Certificates, and we continue to do so.
Both the RPI and CPI can go up or down, and the difference between them can change.
To check the latest official figures, and find out more about how inflation is calculated, visit www.statistics.gov.uk
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