Inflation
Inflation is the rate at which prices rise over time, reducing what each pound can buy.
Also known as: rate of inflation
The Bank of England aims for inflation of 2% a year. If your savings earn less than inflation, their buying power falls even though the balance grows.
This is why long-term savers consider the real return after inflation, and why investments may suit money you will not need for many years.
Free, impartial guidance is available from MoneyHelper and Pension Wise. Be wary of any unsolicited offers about your pension or investments.
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