THE most-used measures of inflation in the UK are the consumer prices index, the consumer prices housing index and the retail prices index.
Each measure is calculated slightly differently, although RPI has a tendency to be the highest.
While no one really needs to know in detail how each measure is calculated, it is useful to know the current rate. This is because different rates are used for different things.
For example, RPI is typically linked to final salary pension payments, car tax and interest on student loans, whereas CPI is often used by the UK government for things such as calculating figures for the State pension, and benefits such as Universal Credit.
In the 12 months prior to June 2021, inflation continued to accelerate, with the CPI rising to 2.5%, up from 2.1% in May, according to the latest figures from the Office for National Statistics. On a monthly basis, CPI rose by 0.5% in June this year, compared with a rise of 0.1% in June 2020.
In addition, CPIH, the measure of the annual rate of UK consumer price inflation that includes owner-occupiers’ housing costs, rose to 2.4% in the 12 months to June, up from 2.1% in May, rising by 0.4% on a monthly basis.
Jersey’s current rate of inflation, as of June 2021, is 3.5, and a further update is due in October.
All this comes on top of the news that the CBI has reported that business confidence in the financial-services sector has grown at the fastest pace since June 2017 during Q2 2021.
With rising inflation, it may be a good time to check the interest rate on your savings. With many banks paying very little in terms of returns on your savings, reviewing the interest rate your bank or building society is paying (especially in a rising-inflation environment) may be a smart move.
Savers may be able to get a better return with a different savings provider. Many banks and building societies will offer a range of savings accounts, often including easy-access, notice and fixed-term, with interest rates increasing for long-term commitment.
In general terms, a low interest rate environment, coupled with rising inflation, is not great news for savers. Although finding a savings rate that beats inflation is unlikely, savers could potentially get a better return on their savings by shopping around, which reduces the affect inflation has on their money. Savers should check what rate their current provider is paying them, and if it doesn’t meet their expectations, research other providers to see if they can get a more competitive deal on their well-earned savings.
Skipton International is a Guernsey-licensed bank with over £2 billion in assets and customers in more than 100 countries around the globe, including Jersey. We offer a selection of attractive easy-access, notice and fixed-rate savings accounts. Anyone who wants to know more can find out further details by visiting skiptoninternational.com/offshore-savings-accounts.
