7 simple ways to boost your savings
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Read more…Inflation rates vs savings account rates
Does inflation reduce the value of your savings?
Inflation represents how goods and services rise in cost and decrease your money’s value. While interest rates on savings accounts might make it seem like your account’s value is increasing, inflation could be causing your savings to lose value in “real terms”. We’ve looked at historical inflation and savings accounts interest rates to see how much is lost due to the rising costs of living.
Quick overview
- As of October 2023, the inflation rate is 4.7% and the average savings rate is 3.25%.
- The inflation rate reached its highest point since 1981 in October 2022, peaking at 11.1%.
- The largest gap between inflation and savings rates over the last decade was recorded in July 2022, when inflation was 9.42% higher than the average savings rate.
- The average UK savings account lost over £4,000 in real-term value between May 2013 and May 2023 due to high inflation.
Average savings rate vs inflation since 2013
Over the last decade, the average savings rate has mostly been below the inflation rate. November 2014 to August 2016 was the only period during the ten years when savings rates were consistently above inflation. Since November 2020, the monthly consumer price index (CPI) inflation rate has been higher than the average savings rate.
The average savings rates in the graph below are based on the average interest rate paid on variable Individual Savings Accounts (ISAs) in the UK each month between 2013 and 2023.
| Month | Inflation rate | Average savings account rate |
|---|---|---|
| Oct 13 | 2.20% | 1.26% |
| Nov 13 | 2.10% | 1.17% |
| Dec 13 | 2.00% | 1.09% |
| Jan 14 | 1.90% | 1.17% |
| Feb 14 | 1.70% | 1.18% |
| Mar 14 | 1.60% | 1.40% |
| Apr 14 | 1.80% | 1.31% |
| May 14 | 1.50% | 1.19% |
| Jun 14 | 1.90% | 1.17% |
| Jul 14 | 1.60% | 1.19% |
| Aug 14 | 1.50% | 1.09% |
| Sep 14 | 1.20% | 1.09% |
| Oct 14 | 1.30% | 1.09% |
| Nov 14 | 1.00% | 1.09% |
| Dec 14 | 0.50% | 1.05% |
| Jan 15 | 0.30% | 1.02% |
| Feb 15 | 0.00% | 1.02% |
| Mar 15 | 0.00% | 1.02% |
| Apr 15 | -0.10% | 1.03% |
| May 15 | 0.10% | 1.01% |
| Jun 15 | 0.00% | 1.01% |
| Jul 15 | 0.10% | 1.01% |
| Aug 15 | 0.00% | 1.01% |
| Sep 15 | -0.10% | 0.98% |
| Oct 15 | -0.10% | 0.99% |
| Nov 15 | 0.10% | 0.99% |
| Dec 15 | 0.20% | 0.85% |
| Jan 16 | 0.30% | 0.86% |
| Feb 16 | 0.30% | 0.91% |
| Mar 16 | 0.50% | 0.87% |
| Apr 16 | 0.30% | 0.92% |
| May 16 | 0.30% | 0.87% |
| Jun 16 | 0.50% | 0.85% |
| Jul 16 | 0.60% | 0.81% |
| Aug 16 | 0.60% | 0.70% |
| Sep 16 | 1.00% | 0.65% |
| Oct 16 | 0.90% | 0.64% |
| Nov 16 | 1.20% | 0.59% |
| Dec 16 | 1.60% | 0.49% |
| Jan 17 | 1.80% | 0.40% |
| Feb 17 | 2.30% | 0.44% |
| Mar 17 | 2.30% | 0.43% |
| Apr 17 | 2.70% | 0.45% |
| May 17 | 2.90% | 0.41% |
| Jun 17 | 2.60% | 0.34% |
| Jul 17 | 2.60% | 0.33% |
| Aug 17 | 2.90% | 0.35% |
| Sep 17 | 3.00% | 0.30% |
| Oct 17 | 3.00% | 0.27% |
| Nov 17 | 3.10% | 0.29% |
| Dec 17 | 3.00% | 0.36% |
| Jan 18 | 3.00% | 0.94% |
| Feb 18 | 2.70% | 0.86% |
| Mar 18 | 2.50% | 0.88% |
| Apr 18 | 2.40% | 0.68% |
| May 18 | 2.40% | 0.63% |
| Jun 18 | 2.40% | 0.68% |
| Jul 18 | 2.50% | 0.68% |
| Aug 18 | 2.70% | 0.76% |
| Sep 18 | 2.40% | 0.85% |
| Oct 18 | 2.40% | 0.96% |
| Nov 18 | 2.30% | 0.89% |
| Dec 18 | 2.10% | 0.93% |
| Jan 19 | 1.80% | 0.86% |
| Feb 19 | 1.90% | 0.90% |
| Mar 19 | 1.90% | 0.95% |
| Apr 19 | 2.10% | 0.86% |
| May 19 | 2.00% | 0.85% |
| Jun 19 | 2.00% | 0.95% |
| Jul 19 | 2.10% | 0.87% |
| Aug 19 | 1.70% | 0.89% |
| Sep 19 | 1.70% | 0.93% |
| Oct 19 | 1.50% | 0.87% |
| Nov 19 | 1.50% | 0.53% |
| Dec 19 | 1.30% | 0.57% |
| Jan 20 | 1.80% | 0.60% |
| Feb 20 | 1.70% | 0.56% |
| Mar 20 | 1.50% | 0.54% |
| Apr 20 | 0.80% | 0.52% |
| May 20 | 0.50% | 0.57% |
| Jun 20 | 0.60% | 0.38% |
| Jul 20 | 1.00% | 0.22% |
| Aug 20 | 0.20% | 0.21% |
| Sep 20 | 0.50% | 0.22% |
| Oct 20 | 0.70% | 0.26% |
| Nov 20 | 0.30% | 0.35% |
| Dec 20 | 0.60% | 0.32% |
| Jan 21 | 0.70% | 0.35% |
| Feb 21 | 0.40% | 0.33% |
| Mar 21 | 0.70% | 0.13% |
| Apr 21 | 1.50% | 0.17% |
| May 21 | 2.10% | 0.24% |
| Jun 21 | 2.50% | 0.19% |
| Jul 21 | 2.00% | 0.16% |
| Aug 21 | 3.20% | 0.17% |
| Sep 21 | 3.10% | 0.17% |
| Oct 21 | 4.20% | 0.17% |
| Nov 21 | 5.10% | 0.21% |
| Dec 21 | 5.40% | 0.19% |
| Jan 22 | 5.50% | 0.31% |
| Feb 22 | 6.20% | 0.31% |
| Mar 22 | 7.00% | 0.47% |
| Apr 22 | 9.00% | 0.48% |
| May 22 | 9.10% | 0.51% |
| Jun 22 | 9.40% | 0.62% |
| Jul 22 | 10.10% | 0.68% |
| Aug 22 | 9.90% | 0.81% |
| Sep 22 | 10.10% | 1.44% |
| Oct 22 | 11.10% | 1.70% |
| Nov 22 | 10.70% | 1.76% |
| Dec 22 | 10.50% | 1.90% |
| Jan 23 | 10.10% | 1.73% |
| Feb 23 | 10.40% | 1.85% |
| Mar 23 | 10.10% | 1.96% |
| Apr 23 | 8.70% | 2.61% |
| May 23 | 8.70% | 2.43% |
| June 23 | 7.90% | 2.59% |
| Jul 23 | 6.40% | 2.70% |
| Aug 23 | 6.30% | 2.65% |
| Sep 23 | 6.30% | 3.15% |
| Oct 23 | 4.60% | 3.25% |
How does inflation affect savings?
Inflation lowers the purchasing power of money over time. Therefore, a low savings rate combined with a higher inflation rate results in a loss of the value of your savings account in real terms.
According to our recent survey, the average savings per person in the UK is £17,773. If that amount were put in a standard variable ISA in May 2013, it would have effectively lost £4,047 in real terms by May 2023.
We calculated this by comparing how average savings rates have kept up with inflation. For example, if average savings rates had been at the level of inflation, £17,773 deposited in 2012 would be worth £23,333 in 2022. Instead, with the actual average savings rates, your savings would be worth £19,286.
Most of this loss comes in the last few years, as inflation has soared due to various geopolitical and economic events.
| Month | Savings | Breakeven with inflation |
|---|---|---|
| May 13 | £17,794 | £17,813 |
| Jun 13 | £17,813 | £17,856 |
| Jul 13 | £17,832 | £17,898 |
| Aug 13 | £17,851 | £17,938 |
| Sep 13 | £17,869 | £17,978 |
| Oct 13 | £17,888 | £18,011 |
| Nov 13 | £17,906 | £18,043 |
| Dec 13 | £17,922 | £18,073 |
| Jan 14 | £17,939 | £18,101 |
| Feb 14 | £17,957 | £18,127 |
| Mar 14 | £17,978 | £18,151 |
| Apr 14 | £17,998 | £18,179 |
| May 14 | £18,015 | £18,201 |
| Jun 14 | £18,033 | £18,230 |
| Jul 14 | £18,051 | £18,254 |
| Aug 14 | £18,067 | £18,277 |
| Sep 14 | £18,084 | £18,295 |
| Oct 14 | £18,100 | £18,315 |
| Nov 14 | £18,117 | £18,331 |
| Dec 14 | £18,132 | £18,338 |
| Jan 15 | £18,148 | £18,343 |
| Feb 15 | £18,163 | £18,343 |
| Mar 15 | £18,179 | £18,343 |
| Apr 15 | £18,194 | £18,341 |
| May 15 | £18,210 | £18,343 |
| Jun 15 | £18,225 | £18,343 |
| Jul 15 | £18,240 | £18,344 |
| Aug 15 | £18,256 | £18,344 |
| Sep 15 | £18,271 | £18,343 |
| Oct 15 | £18,286 | £18,341 |
| Nov 15 | £18,301 | £18,343 |
| Dec 15 | £18,314 | £18,346 |
| Jan 16 | £18,327 | £18,350 |
| Feb 16 | £18,341 | £18,355 |
| Mar 16 | £18,354 | £18,363 |
| Apr 16 | £18,368 | £18,367 |
| May 16 | £18,381 | £18,372 |
| Jun 16 | £18,394 | £18,380 |
| Jul 16 | £18,407 | £18,389 |
| Aug 16 | £18,418 | £18,398 |
| Sep 16 | £18,428 | £18,413 |
| Oct 16 | £18,437 | £18,427 |
| Nov 16 | £18,446 | £18,445 |
| Dec 16 | £18,454 | £18,470 |
| Jan 17 | £18,460 | £18,498 |
| Feb 17 | £18,467 | £18,533 |
| Mar 17 | £18,474 | £18,569 |
| Apr 17 | £18,480 | £18,611 |
| May 17 | £18,487 | £18,655 |
| Jun 17 | £18,492 | £18,696 |
| Jul 17 | £18,497 | £18,736 |
| Aug 17 | £18,502 | £18,782 |
| Sep 17 | £18,507 | £18,829 |
| Oct 17 | £18,511 | £18,876 |
| Nov 17 | £18,516 | £18,924 |
| Dec 17 | £18,521 | £18,972 |
| Jan 18 | £18,536 | £19,019 |
| Feb 18 | £18,549 | £19,062 |
| Mar 18 | £18,563 | £19,102 |
| Apr 18 | £18,573 | £19,140 |
| May 18 | £18,583 | £19,178 |
| Jun 18 | £18,593 | £19,217 |
| Jul 18 | £18,604 | £19,257 |
| Aug 18 | £18,616 | £19,300 |
| Sep 18 | £18,629 | £19,339 |
| Oct 18 | £18,644 | £19,377 |
| Nov 18 | £18,658 | £19,414 |
| Dec 18 | £18,672 | £19,448 |
| Jan 19 | £18,686 | £19,477 |
| Feb 19 | £18,700 | £19,508 |
| Mar 19 | £18,714 | £19,539 |
| Apr 19 | £18,728 | £19,573 |
| May 19 | £18,741 | £19,606 |
| Jun 19 | £18,756 | £19,639 |
| Jul 19 | £18,770 | £19,673 |
| Aug 19 | £18,783 | £19,701 |
| Sep 19 | £18,798 | £19,729 |
| Oct 19 | £18,812 | £19,754 |
| Nov 19 | £18,820 | £19,778 |
| Dec 19 | £18,829 | £19,800 |
| Jan 20 | £18,838 | £19,829 |
| Feb 20 | £18,847 | £19,857 |
| Mar 20 | £18,856 | £19,882 |
| Apr 20 | £18,864 | £19,896 |
| May 20 | £18,873 | £19,904 |
| Jun 20 | £18,879 | £19,914 |
| Jul 20 | £18,882 | £19,930 |
| Aug 20 | £18,885 | £19,934 |
| Sep 20 | £18,889 | £19,942 |
| Oct 20 | £18,893 | £19,954 |
| Nov 20 | £18,898 | £19,959 |
| Dec 20 | £18,904 | £19,969 |
| Jan 21 | £18,909 | £19,980 |
| Feb 21 | £18,914 | £19,987 |
| Mar 21 | £18,916 | £19,999 |
| Apr 21 | £18,919 | £20,024 |
| May 21 | £18,923 | £20,059 |
| Jun 21 | £18,926 | £20,100 |
| Jul 21 | £18,928 | £20,134 |
| Aug 21 | £18,931 | £20,188 |
| Sep 21 | £18,934 | £20,240 |
| Oct 21 | £18,936 | £20,311 |
| Nov 21 | £18,940 | £20,397 |
| Dec 21 | £18,943 | £20,489 |
| Jan 22 | £18,948 | £20,583 |
| Feb 22 | £18,952 | £20,689 |
| Mar 22 | £18,960 | £20,810 |
| Apr 22 | £18,967 | £20,966 |
| May 22 | £18,975 | £21,125 |
| Jun 22 | £18,985 | £21,290 |
| Jul 22 | £18,996 | £21,469 |
| Aug 22 | £19,009 | £21,646 |
| Sep 22 | £19,032 | £21,829 |
| Oct 22 | £19,059 | £22,031 |
| Nov 22 | £19,087 | £22,227 |
| Dec 22 | £19,117 | £22,421 |
| Jan 23 | £19,144 | £22,610 |
| Feb 23 | £19,174 | £22,806 |
| Mar 23 | £19,205 | £22,998 |
| Apr 23 | £19,247 | £23,165 |
| May 23 | £19,286 | £23,333 |
| Year | Difference |
|---|---|
| Year | Difference |
| May 13 | -£19 |
| May 14 | -£186 |
| May 15 | -£133 |
| May 16 | £10 |
| May 17 | -£169 |
| May 18 | -£595 |
| May 19 | -£865 |
| May 20 | -£1,031 |
| May 21 | -£1,136 |
| May 22 | -£2,149 |
| May 23 | -£4,047 |
Inflation has sky-rocketed over the last few years in particular. In fact, if £17,773 had been placed in a cash ISA as recently as January 2021, it would still have lost around £2,640 in “real-term” value by May 2023. If savings had increased in line with inflation, this amount would have grown to £20,767, yet the actual figure stands at just £18,127.
UK inflation rate history
The average inflation rate in the UK reached a 41-year high in October 2022. Meanwhile, between 1995 and 2020, the UK experienced relatively low inflation of around 2%. The average inflation since 1989 is 2.69%.
Out of the last 34 years, 2022 recorded the highest inflation rate at 9.1%, followed by 1991 with 7.5%. The CPI (consumer price index) inflation rate peaked at 11.1% in October 2022, while the CPIH (Consumer Prices Index including owner occupiers’ housing costs) inflation rate peaked at 9.6%.
| Year | Average inflation rate |
|---|---|
| 1990 | 7.00% |
| 1991 | 7.50% |
| 1992 | 4.20% |
| 1993 | 2.50% |
| 1994 | 2.00% |
| 1995 | 2.60% |
| 1996 | 2.40% |
| 1997 | 1.80% |
| 1998 | 1.60% |
| 1999 | 1.30% |
| 2000 | 0.80% |
| 2001 | 1.20% |
| 2002 | 1.30% |
| 2003 | 1.40% |
| 2004 | 1.30% |
| 2005 | 2.10% |
| 2006 | 2.30% |
| 2007 | 2.30% |
| 2008 | 3.60% |
| 2009 | 2.20% |
| 2010 | 3.30% |
| 2011 | 4.50% |
| 2012 | 2.80% |
| 2013 | 2.60% |
| 2014 | 1.50% |
| 2015 | 0.00% |
| 2016 | 0.70% |
| 2017 | 2.70% |
| 2018 | 2.50% |
| 2019 | 1.80% |
| 2020 | 0.90% |
| 2021 | 2.60% |
| 2022 | 9.10% |
UK savings rates history
Over the last 34 years, the average savings rate has been 4.29%, peaking in 1990 at 13.56%. The average savings rate has generally been higher than inflation and has only dipped below it 11 times in the last 43 years. However, in 8 of the last 10 years, the savings rate has been lower than inflation.
| Year | Average Savings rate |
|---|---|
| 1990 | 13.56% |
| 1991 | 10.57% |
| 1992 | 8.19% |
| 1993 | 5.66% |
| 1994 | 5.36% |
| 1995 | 5.60% |
| 1996 | 4.54% |
| 1997 | 5.45% |
| 1998 | 6.33% |
| 1999 | 4.71% |
| 2000 | 5.47% |
| 2001 | 4.64% |
| 2002 | 3.68% |
| 2003 | 3.73% |
| 2004 | 4.56% |
| 2005 | 4.92% |
| 2006 | 4.68% |
| 2007 | 5.55% |
| 2008 | 5.09% |
| 2009 | 2.21% |
| 2010 | 2.80% |
| 2011 | 2.75% |
| 2012 | 2.80% |
| 2013 | 1.77% |
| 2014 | 1.48% |
| 2015 | 1.40% |
| 2016 | 1.23% |
| 2017 | 0.99% |
| 2018 | 1.18% |
| 2019 | 1.39% |
| 2020 | 0.64% |
| 2021 | 0.35% |
| 2022 | 0.59% |
What can you buy with interest earned on savings?
We looked at how long it would take to reach certain savings goals with interest earned alone based on saving £1,000 at 2.43%. It would take over 100 years for a 5% down payment on the average home in the UK.
A more attainable goal would be to purchase an England football kit for the 2026 World Cup – it would only take 4 years to earn enough interest to purchase one! By 2034, you could earn enough interest on your savings to pay for a weekend trip to Paris by Eurostar.
Sources used and methodology
- The monthly savings rates in the graphs comparing inflation and savings are taken from Bank of England data on the quoted household interest rates on variable cash ISAs.
- The historical inflation rates are CPI data from ONS.
- In calculations, interest is assumed to be compounded monthly.
- The historical yearly savings rates are taken from Swanlow Park.
- To find the average UK savings, Finder commissioned Censuswide on 10/03/2023 to conduct a nationally representative survey of adults aged 18+. A total of 2,000 people were questioned throughout Great Britain, with representative quotas for gender, age and region.
For all media enquiries, please contact
Matt Mckenna
UK Communications Manager
T: +44 20 8191 8806
UK Communications Manager
T: +44 20 8191 8806
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