Inflation calculator: see how the newest rate impacts your savings

The True Cost of Inflation on Your Savings

Discover how rising prices can impact your savings with this easy-to-use calculator, which reveals how the current Consumer Prices Index (CPI) inflation rate affects your returns.

Inflation Calculator

Instructions

• Enter the amount you have saved or invested in a savings account or cash ISA.
• Input the interest rate your account is currently offering.
• Click “Calculate” to view your results.

How the Calculator Works

This tool estimates the interest your savings will generate over a year, assuming both your balance and interest rate remain unchanged and interest is paid annually.

It then compares your interest earnings to the latest CPI inflation figure, as published by the Office for National Statistics.

If inflation stays at its current level, the calculator demonstrates how much purchasing power your savings could lose over time due to rising prices.

You’ll also see the projected cumulative effect of inflation on your savings over the next five years.

Why Use This Calculator?

This calculator helps you determine if it’s beneficial to move your money to a savings account or cash ISA with a higher interest rate.

Especially when inflation is elevated, it’s crucial to seek out the most competitive savings rates to help offset the impact of rising costs. Otherwise, your money’s buying power will diminish year after year.

You can also use this tool to compare how much more you could earn by switching to a better-paying account.

Example Scenario

Suppose you have £20,000 in an account earning the current average easy-access rate of 2.45% (according to Moneyfacts). After one year, inflation would cause a “real terms” loss of £183.75. While you’d earn £490 in interest, the inflation-adjusted value of your savings would drop to £19,816.25.

If you switched to the leading easy-access account, currently offered by Cahoot at 5%, your inflation-adjusted gain would be £348.84, with actual interest earnings of £1,000.