There is much debate over how inflation is calculated and what
is included in the RPI’s “basket of goods & services”. But as most of us
know, everything seems to be getting more and more expensive from the cost of
food shopping, to utility bills to the price of petrol. Can you remember when
it was unthought-of for petrol to be over £1 a litre and now it’s 133p a litre?
Reported UK consumer price inflation was 2.7% in May
meaning that on average you need to spend £102.70 now to buy things you bought
12 months ago for £100. But of course everyone’s household spending is
different and the BBC have got a simple calculator on their website to work out
how inflation affects you (found at http://www.bbc.co.uk/news/business-11331052).
So where does this leave your investments especially those sitting in nil-paying or low paying bank accounts? How much will they will be worth in 10 years time in real terms? Banish the inertia regarding your investments and seriously consider where they would be best invested for the long term.