
What does inflation mean for your money?
Inflation can rise and fall. We can help you understand what it is and how it can affect your financial plan.
What is inflation?
Inflation is the term given to the price increase of goods and services. It is calculated by the Office for National Statistics by comparing the average cost of a selection (or basket) of items today, against their price this time last year. For example, if a pint of milk cost £1 this time last year, and costs £1.03 this year, then the rate of inflation is 3%.

How could inflation impact me?
On a daily basis, inflation changes how much money is worth. If there’s a higher inflation rate, your money won’t go as far because things cost more.
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 sets a year on year inflation target of 2%. Controlled inflation can be a positive for the economy. But if it jumps too quickly or unpredictably, it can cause concern. When this happens, you might 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, simply enter an amount, along with the current rate of inflation. We’ll then tell you the future buying power of your money, based on the rate remaining the same for the next year.
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 of the latest inflation figures, visit the Office for National Statistics
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