Savers deserve a break from the scourge of inflation

‘No UK government has been able to balance its books in two decades’

- Ross Clark

YOU HAVE to be in your 50s to remember living with sustained high inflation. For the past three decades we haven’t had to worry about the buying power of our salaries and savings diminishing by the week – as we did in the 1970s when inflation peaked at over 25 per cent.

But it looks as if that benign era could finally be behind us. Figures for October, published by the Office for National Statistics this week, show the Consumer Prices Index (CPI) surging to 4.2 per cent, up from 3.1 per cent in September. The CPI now stands at more than twice the target at which the Bank of England is supposed to maintain it.

Inflation affects all of us, but especially people who are trying to live on fixed incomes – who have done the right thing through their lives and saved for their retirement. Their wealth is quickly being eroded. The derisory interest rates on offer from banks and building societies do not even begin to protect savings from inflation.

But where is the Bank of England’s Monetary Policy Committee (MPC)? This month it voted to keep interest rates pegged at the record low level of 0.1 per cent. That was supposed to be an emergency rate, introduced to stimulate the economy during the Covid crisis. Yet rates haven’t budged even when inflation is soaring and the economy growing at a healthy pace.