Bank with 3m customers Bank of England alert to anyone with savings | Personal Finance | Finance

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A bank with three million customers has issued an alert to all savers – saying they are losing money by not taking action. Ahead of UK inflation figures coming out on Wednesday, Tesco Bank said its research shows 39% of Brits are unaware of how inflation impacts savings.

The provider said that this was especially an issue among people in their 20s and 40s, with nearly half (49%) not being sure about how inflation impacts savings, meaning they could be missing out on shielding their savings and making their cash go further.

The Bank of England is set to reveal the latest inflation figures on Wednesday July 16, and Tesco Bank said the update could mean bad news for anyone with money in savings accounts.

Tesco said the rate of inflation is important for consumers as it shows how much the price of goods are rising by, and how much it could be reducing consumers’ purchasing power.

Among those who don’t fully understand what inflation does, 11% incorrectly believe inflation increases the value of savings, while 7% think inflation does nothing. One in five (20%) reveal they simply aren’t sure what inflation means, the survey said.

Chris Henderson, Save and Pay Director, Tesco Bank said: “Given the cost of living, it’s concerning that so many people are in the dark on inflation and the impact it has on their money.

“Knowing what inflation does to your money, and how you can protect your savings when the inflation rate is higher, is an important part of managing personal finances. When the rate of inflation is on the rise, it means the costs of things in our everyday lives are going up more quickly, so the money we have in the bank doesn’t stretch as far. As an example, if inflation remains at 3.5% for the next 12 months, the £100 you have in the bank today would buy you £96.62 worth of goods in a year’s time.

“The truth is that inflation is different for everyone depending on what you buy, or pay for, each month but being aware of the UK’s inflation rate is important. While there is no fail-safe way to protect your money from inflation, making sure you are getting a competitive interest rate on your savings can certainly help.”

Meanwhile the Bank of England could make cuts to interest rates if the jobs market slows down, Andrew Bailey has said. Businesses are “adjusting employment” as a result of Chancellor Rachel Reeves’ decision to raise national insurance contributions (NICs) for employers, the governor of the Bank also told The Times.

Companies are “also having pay rises that are possibly less than they would have been if the NICs change hadn’t happened”, Mr Bailey said. In an interview with the newspaper, the governor said the British economy was growing behind its potential.

Mr Bailey said he believes the base rate set by the Bank of England would be lowered in future, after it was held in June. The current Bank rate of 4.25%, which has a bearing on all lending in the UK – including mortgages – will be reviewed again on August 7 by the Bank’s Monetary Policy Committee.

“I really do believe the path is downward,” Mr Bailey told The Times. He added: “But we continue to use the words ‘gradual and careful’ because… some people say to me ‘why are you cutting when inflation’s above target?’”