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"Inflation is the quiet destroyer of money

ended 16. July 2025

INFLATION is “the quiet destroyer of money”, experts have said, and the fact that it's continuing to rise, up to 3.6% in June, is “dire news for savers”.

Rob Mansfield, Independent Financial Advisor at Tonbridge-based Rootes Wealth Management, said: “Inflation is the quiet destroyer of money. And it's rising, which is dire news for savers. Inflation reduces what your money is worth and so it's more important than ever to check the interest rate on your savings accounts.

"Is your bank paying you an interest rate above inflation? If not, it won't feel like it, but in real terms the value of your money is going down each year as it will buy less than it did a year ago.”

Adam Tibbetts, Head Of Advisory Trading at Atlantic Capital Markets commented: "My advice to savers is to be proactive and strategic. First, avoid letting cash sit idle in low-yield accounts that don’t keep up with inflation. Consider diversifying into inflation-protected assets such as Treasury Inflation-Protected Securities (TIPS), certain bonds, or funds designed to hedge inflation risk. Additionally, look at higher-yield savings accounts or fixed-term deposits that offer better rates, but be mindful of liquidity needs.

“Savers should also keep an eye on the Bank of England's communications and market signals. If inflation remains elevated, expect interest rates to stay firm or rise, which could improve returns on savings but also increase mortgage and loan costs. Balancing these factors is key. Savers must adapt by seeking inflation-hedged investments and better-yielding savings options while monitoring central bank policy closely.”

Scott Gallacher, Director at Leicester-based wealth manager, Rowley Turton, added: "Today’s rise in inflation to 3.6% is bad news for savers because it erodes the real value of their money. Even if you’re getting a decent interest rate on your savings, higher inflation means your cash is losing purchasing power faster than before. It’s a reminder that savers can’t afford to be complacent and need to check that their money is working as hard as possible.

“However, there’s a potential silver lining. This uptick in inflation could make the Bank of England more cautious about cutting interest rates in August. For savers, that means higher rates might stick around for a bit longer, giving them more time to lock into competitive fixed-rate accounts or higher-paying easy access deals. Now is the time to ensure that your savings are earning a decent rate of interest rather than languishing in low-paying accounts. Shop around and look at fixed-term accounts for higher rates if you don’t need immediate access.

Meanwhile, Colin Low, Managing Director at Ipswich-based wealth manager, Kingsfleet, urged savers to check their accounts as a matter of priority: "Savers: do not delay. With inflation rising, now is the time to check the interest you are receiving on your savings. If you can tie up your money for a year, you may still get a fixed rate of around 4%. However, if inflation continues to rise and that's a possibility given world events and domestic economic policies, you may still lose out in terms of the real value of your savings. Scan the market for the best deals, be savvy and, if you need to, seek advice."

Philly Ponniah, Chartered Wealth Manager and Financial Coach at Philly Financial, said “it’s crucial to hold cash only for short-term needs and emergencies, and consider investing the rest if you’re comfortable with risk. Keeping too much in cash could be seen as the bigger risk long term. If you are totally risk averse and want to stay in cash, at least do your homework to ensure you are getting the best rates possible. Equally, find an adviser or financial expert who can help. But whatever you do, do NOT do nothing”. 

David Belle, Trader at Fink Money, said Brits need to rethink their relationship with risk, and adopt the approach of their US counterparts: “Savers have to start thinking differently. All the more so given that inflation is rising again. There is arguably as much risk sitting in low interest cash in an inflationary environment as there is in being in theoretically riskier investments. As inflation increases, the downside of NOT seeking a greater return is amplified. Low risk can, as bizarre as it sounds, become high risk. It's a change of mindset savers need to understand."

11 responses from the Newspage community

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Rob Mansfield
Independent Financial Advisor at Rootes Wealth Management
Inflation is the quiet destroyer of money. And it's rising, which is dire news for savers. Inflation reduces what your money is worth and so it's more important than ever to check the interest rate on your savings accounts. Is your bank paying you an interest rate above inflation? If not, it won't feel like it, but in real terms the value of your money is going down each year as it will buy less than it did a year ago.
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Philly Ponniah
Chartered Wealth Manager and Financial Coach at Philly Financial
With inflation rising to 3.6%, savers face a double whammy of shrinking real returns and tax on interest above the allowance if they are higher-rate taxpayers. It’s crucial to hold cash only for short-term needs and emergencies, and consider investing the rest if you’re comfortable with risk. Keeping too much in cash could be seen as the bigger risk long term. If you are totally risk averse and want to stay in cash, at least do your homework to ensure you are getting the best rates possible. Equally, find an adviser or financial expert who can help. But whatever you do, do NOT do nothing.
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David Belle
Founder and Trader at Fink Money
Savers have to start thinking differently. All the more so given that inflation is rising again. There is arguably as much risk sitting in low interest cash in an inflationary environment as there is in being in theoretically riskier investments. As inflation increases, the downside of NOT seeking a greater return is amplified. Low risk can, as bizarre as it sounds, become high risk. It's a change of mindset savers need to understand. Brits need to think, save and invest more like their US counterparts. Across the pond during COVID, US stocks were effectively used as an inflation-beating vehicle. Americans got wealthy, but Brits didn't because of the failure to shift themselves along the risk curve. In short, the stagflation environment wer're in is not good for British savers and investors. And even though the FTSE is rallying, it's onlybecause 80% of its sales are done abroad, not because the UK is in a good state.
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Adam Tibbetts
Head Of Advisory Trading at Atlantic Capital Markets
My advice to savers is to be proactive and strategic. First, avoid letting cash sit idle in low-yield accounts that don’t keep up with inflation. Consider diversifying into inflation-protected assets such as Treasury Inflation-Protected Securities (TIPS), certain bonds, or funds designed to hedge inflation risk. Additionally, look at higher-yield savings accounts or fixed-term deposits that offer better rates, but be mindful of liquidity needs. Savers should also keep an eye on the Bank of England's communications and market signals. If inflation remains elevated, expect interest rates to stay firm or rise, which could improve returns on savings but also increase mortgage and loan costs. Balancing these factors is key. Savers must adapt by seeking inflation-hedged investments and better-yielding savings options while monitoring central bank policy closely.
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Colin Low
Managing Director at Kingsfleet
Savers: do not delay. With inflation rising, now is the time to check the interest you are receiving on your savings. If you can tie up your money for a year, you may still get a fixed rate of around 4%. However, if inflation continues to rise and that's a possibility given world events and domestic economic policies, you may still lose out in terms of the real value of your savings. Scan the market for the best deals, be savvy and, if you need to, seek advice.
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Editor
Scott Gallacher
Director at Rowley Turton
Today’s rise in inflation to 3.6% is bad news for savers because it erodes the real value of their money. Even if you’re getting a decent interest rate on your savings, higher inflation means your cash is losing purchasing power faster than before. It’s a reminder that savers can’t afford to be complacent and need to check that their money is working as hard as possible. However, there’s a potential silver lining. This uptick in inflation could make the Bank of England more cautious about cutting interest rates in August. For savers, that means higher rates might stick around for a bit longer, giving them more time to lock into competitive fixed-rate accounts or higher-paying easy access deals. Now is the time to ensure that your savings are earning a decent rate of interest rather than languishing in low-paying accounts. Shop around and look at fixed-term accounts for higher rates if you don’t need immediate access.
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Dariusz Karpowicz
Director at Albion Financial Advice
Inflation's unwelcome return to 3.6% delivers a double blow to savers, silently chipping away at their purchasing power while the broader economy struggles to find its footing. This isn't merely disappointing news, it's a wake-up call that underscores how inflation acts as the stealthy thief of wealth, making yesterday's money worth less today.
However, the uptick in inflation could prompt the Bank of England to pause on rate cuts, potentially keeping returns marginally more attractive for longer. Now's the crucial moment to look long and hard at your savings strategy. Ensure your accounts are earning above inflation or risk watching your hard-earned cash lose ground month by month.
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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
Rising inflation may keep a rate cut off the table in August, which could help savers hold onto higher returns, for now anyway. But with inflation at 3.6%, most savings are still shrinking in real terms. This isn’t a win for savers, it’s a warning. The window to lock in competitive rates is still open, but it may not stay that way for long. Sitting on low-interest accounts risks being quietly eroded by inflation.
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Tony Redondo
Founder at Cosmos Currency Exchange
Rising UK inflation at 3.6% in June further erodes savers’ real returns, as most savings accounts fall below this rate, losing ~£150 per £10,000 annually. Even top accounts at 3.35% lose £99 per £10,000. Tax on interest above allowances (£1,000 basic, £500 higher rate) further cuts returns. This inflation spike, driven by food, goods, and potential energy price rises, is unlikely to delay the 0.25% Bank of England rate cut pencilled in for 7 August, such is the dire state of the economy, and with further rate cuts expected by mid-2026, declining rates are likely to feature for the foreseeable future. Seek high-yield accounts (e.g., 4.55% fixed-rate bonds) or money market funds (4.96% yield). For long-term savings, consider stocks or TIPS. Keep 3-6 months’ expenses accessible. Act fast on fixed rates before cuts and monitor economic trends. Consult a financial adviser for tailored plans.
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Samuel Mather-Holgate
Managing Director & IFA at Mather and Murray Financial
Although most of the county will be reeling as a result of unexpectedly higher inflation, those with cash in the bank who rely on the income will breath a sigh or relief at the prospect of rates staying higher for longer. Andrew Bailey and his cronies will take pause for thought before cutting rates if this will drive inflation. Rates could be kept on hold at the next meeting now, running against the expectation of a further cut.
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Ross Lacey
Director & Independent Financial Adviser at Fairview Financial Management
Inflation is the constant rising tide of prices for the stuff we buy day-in, day-out. It's the silent killer of the buying power of our money, which is why cash in the bank is not the answer to making your money work hard over the long-term. Cash is absolutely important as part of an overall plan, but it's wise to consider other ways to grow your money like investing. As ever, working with a expert financial planner to navigate the various options and what's appropriate for your individual plan is essential.