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.
