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‘savers ignoring inflation’

Savers are mostly unaware of the effects of tax and inflation on their money, a new study claims.

Research from National Savings & Investments shows 64 per cent of people do not take inflation into account when saving.

Only 33 per cent consider the taxation of their savings, down from 37 per cent in February 2004.

The retail prices index – the measure used by NS&I for its inflation-linked products, includes the cost of housing and council tax, unlike the consumer price index used by the Bank of England.

Sales director John Prout says: “Even though we are experiencing a period of relatively low inflation, people who invest their money for more than a few years in an account that does not protect against inflation could see the value of their money diminish as inflation takes its toll.

“I would urge people to think about this when choosing a home for their money.”

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