Inflation Remains

In ation Remains

The e ects of inflation are harder hitting for savers when interest rates are low as it becomes increasingly di cult to find returns that can, at least mirror the rising cost of living. The low interest rate environment we have endured since the financial crisis has meant that whilst interest earned on deposit accounts may have o set the e ect of inflation to some extent, the spending power of money held in even the best paying bank accounts has lost value. Whilst inflation is gradually depleting the value of savers capital and represents a very clear threat to wealth, we can be grateful that it is doing so slowly and we have never experienced hyperinflation in the UK and hopefully never will. However, as a poignant reminder of the threat that inflation represents, the attached fifty billion Zimbabwe- an dollar note is yours to keep. Don’t get too excited though, as back in 2008 Zimbabwe, even this note became as good as worthless as inflation that year o cially reached 231 million percent! In the seminar I will be explaining to what extent even low UK inflation has eroded your spending power – thankfully not to anywhere near the same extent as 2008 Zimbabwe but perhaps still a lot more than you might expect. If you would like to read more about the tragic collapse of Zimbabwe’s currency, please read our blog at www.Lowes.co.uk/Zimbabwe. Inflation is one of the tools used by central governments to help prevent economies from stagnating. Consistent inflation however, can be considered a ‘stealth’ threat to everyone within the financial system – a true enemy of the people. Inflation fundamentally erodes the purchasing power of currency, with the only way to beat these adverse e ects being to ensure that returns on capital invested are escalating at a superior rate.

Ian Lowes

Lowes Financial Management, Fernwood House, Clayton Road, Jesmond, Newcastle upon Tyne, NE2 1TL. Authorised and regulated by the Financial Conduct Authority.