Higher levels of inflation in the UK will hit savers hard, a new report has warned.
Just this week, the Chartered Insurance Institute reported that, with low interest rates being applied to many high street savings accounts, Britons are increasingly looking to clear their debts and improve their credit ratings rather than put money away for the future.
Now, the BBC has suggested that this could continue to be the case for some time yet as people are further deterred from using what spare money they do have to bulk up their savings as higher inflation rates erode such savings in real terms.
According to Christine Ross, an analyst with SG Sambos, many people will now look to pay off high-interest debts, such as credit cards or personal loans, while others may even take the opportunity of unfavourable savings rates to invest in stock market funds instead, the report added.
This comes soon after the Bank of England governor warned that the UK's rate of inflation is likely to rise above three per cent over the next few weeks, though it is expected to come back down towards the two per cent mark before too long.
Meanwhile, the Sunday Telegraph recently launched its 'six point manifesto' for the nation's savers, calling for more to be done to reward people for their financial prudence.
Posted by Gemma Walker
