With persistent inflation and high interest rates squeezing household budgets, safeguarding your finances has never been more crucial. While UK inflation held at 3.4% in May, experts warn it could surge to 4.4% if geopolitical tensions disrupt oil supplies.

Here’s how to shield your savings and outpace inflation, according to financial experts.

Why Inflation Threatens Your Savings

Inflation erodes purchasing power—what costs £1,000 today could cost £1,100 in a year if inflation hits 10%.

  • CPI inflation measures price rises over time.

  • Peaked at 11.1% in 2022 (energy shocks from Ukraine war).

  • Cash loses value if left stagnant—£1,000 today buys less tomorrow.

Geopolitical Risks Could Worsen Inflation

  • Strait of Hormuz tensions may spike oil prices to $150/barrel.

  • Capital Economics warns inflation could jump to 4.4%.

  • Bank of England’s 2% target looks distant.

5 Ways to Protect Your Money

1. Maximise Savings Rates (Don’t Settle for High Street Banks)

✅ Shop around—online banks & savings platforms offer better rates.
✅ Fix your rate—lock in higher interest before potential BoE cuts.
✅ Emergency fund? Keep it in easy-access accounts (but still compare rates).

“Savers should hunt for the best deal—high street banks often lag behind.”
— Sarah Coles, Hargreaves Lansdown

2. Invest in Inflation-Beating Assets

  • Stocks & Shares ISAs (long-term growth potential).

  • Gold & Commodities (historically hedge against inflation).

  • Property or REITs (real estate often outpaces inflation).

3. Review Debts & Mortgages

  • High-interest debt? Prioritise paying it down.

  • Mortgage up for renewal? Lock in a fixed rate to avoid future hikes.

4. Diversify Income Streams

  • Side hustles (freelancing, rentals).

  • Dividend stocks (passive income).

5. Cut Unnecessary Costs

  • Switch utility providers.

  • Cancel unused subscriptions.

  • Buy generic brands where possible.