Millions of savers are losing money by putting their cash into a savings account due to poor investment returns and the increasing cost of living, it has been disclosed.

Rising inflation [they mean rising prices] is eroding the spending power of savers’ cash and, combined with historically low interest rates, is leaving them with less money than when they started.
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Darren Cook, a spokesman for Moneyfacts said: “Each month, inflation is cutting deeper into people’s spending power and lower savings interest rates are creating an even bitterer pill to swallow.

“Those who are relying on their savings pot to subsidise other income are seeing their savings being eroded.

“Savers are hoping that this is just a short spike in inflation, but will lead to further aggravating issues if inflation does not fall as quickly as it is going up.”

Crack open the champagne. Inflation is back up to 3.5 per cent. The reason an economist might consider this a cause for celebration is that by common agreement inflation is a lesser evil than deflation, and a year ago, it was the latter which was considered the bigger risk.

There’s not much sign of deflation in these latest numbers. In his letter of explanation to the Chancellor, the Governor of the Bank of England, Mervyn King, blames the overshoot on three factors – the restoration of the standard rate of VAT to 17.5 per cent, the rise in oil prices, and the depreciation in sterling. I’m not sure that provides much of an excuse for missing the inflation target. The next thing is the Governor will be saying that food prices and wages lie outside the Bank’s control too, so don’t blame the Bank when they start rising. The Bank seems perfectly content to take the credit for low prices, but won’t accept any of the blame when inflation spirals out of control.