Today’s inflation figures. What’s the impact on savers and borrowers?

11.1% inflation is serious and then some. At 8%, it meant that households had lost the equivalent of one month's income. Now their real incomes have dropped even further. This will leave little income for the average household to save or invest. Given inflation is still rising we will likely see further increases to the Bank of England base rate, which will help savers but hammer borrowers. Coupled with the expected changes to the R&D tax credit scheme in the Autumn Statement, rising interest rates could well stifle investment and innovation. We need innovation to increase productivity so that we can achieve economic growth, but rising rates will scupper that.

These latest figures make grim but unsurprising reading. Inflation continues to rise sharply and shows no sign of abating. It's now more likely there will be another hefty base rate rise at next month's Bank of England Monetary Policy Committee meeting. Central banks are competing to protect their currencies from falls that increase domestic inflationary pressures, particularly in the price of imported and Dollar-denominated gas and oil. While further rate rises are good news for long-suffering savers, who will finally see a decent return, mortgage rates will only get more expensive next month. The level of payment shock next year for those remortgaging will be off the charts.

Inflation is the Grinch that will ruin many a Christmas this year. Like a disease, inflation is bad news for everyone, from savers to borrowers. Whilst savers may benefit from interest rate rises, they will be nowhere near close to replacing the loss in value due to inflation. For borrowers they will face the dual problem of rising prices and the increased cost of serving any debt that was not on a fixed rate. In a country that has historically put a lot of Christmas expense on credit cards, that is very bad news. Expect the British economy to be the sick man of both Europe and the main economic nations in 2023. How long before ministers start comparing our economy to Russia's in a desperate attempt to cover their chronic mismanagement?

With inflation as high as it currently is, there will be no sign on the horizon of falling interest rates at the Bank of England. Whilst the current rate of inflation is 11.1%, it's not something we were not expecting. However, the news will cause some uncertainty and caution I believe over the holiday season, hitting retail and hospitality sales at a critical time of year for them. April 2023 is a critical month for the inflation figures moving forward. In April 2022, inflation was at 9% following a large 2% jump from March 2022's 7%. Inflation will become really painful if it begins to compound year on year at such high levels, and as as such there will be the hope the interest rate interventions will begin to see the inflation rate drop significantly by this time, otherwise the cost of living may begin to spiral out of control for more and more people.

Inflation is to cash what a moth is to your favourite jumper. Three questions all savers should be asking in a high-inflation environment are, what are my savings goals, how quickly would I need access to my cash if my saving goal is met, and am I getting the best reward for the hard work I've put in to save? It may feel like hard work but switching accounts can be a simple and effective way to get a higher interest rate on cash savings. Many banks can now do a switch for you in a matter of days, taking away a lot of the admin hassle. For people with longer term savings goals, investing may be the ticket to beating inflation. Take a look at investment options such as a Stocks and Shares Individual Savings Account (ISA). Only 5% of the UK population use a Stocks & Shares ISA but they can offer a great way to protect your savings and any growth in the value of investment is tax-free. Of course, as with any investment the value of your money may go up as well as down.