Inflation proof your sunny days
July 2025
4 minute read
Inflation proof your sunny days
July 2025
4 minute read
Everything costs more these days, from your supermarket shop to household bills. But rising prices don’t mean you have to put your dreams on hold. In this blog, we explore how your savings can keep their value and protect the moments that make life special.
After all, lots of us are still planning for our sunny day moments. According to our research, 56% of people over 50 are saving for holidays, family milestones, and hobbies.1
What exactly is inflation?
Inflation is the rate at which prices rise over time. When inflation is high, your money buys less. When it’s low, your money goes a bit further.
You’ll usually see inflation shown as a percentage. For example, in the past three years, UK inflation peaked at around 11.1% in October 2022. It’s dropped to 3.4% in the 12 months to May 20251.
Even though inflation has fallen, and has not increased since May 2025, prices are still rising. You might have noticed the impact as the cost of living has gone up.
How does inflation affect your savings?
Inflation can reduce the value of savings. You could think of it like a slow leak – even if you don’t spend your money.
Let’s say you had £1,000 in a savings account earning 2% annually. If inflation was 4% over the year, things that cost £1,000 today will cost £1,040 next year. But if your savings only earned 2% in interest over the year, you’d only get £1,020. This means your savings would lose £20 in value.
How can you protect your savings?
Work out how much you need for emergencies
It’s always a good idea to have some savings you can get to if life takes an unexpected turn. This could be to cover essentials, like bills, food or travel expenses.
Think about how much you might need in your emergency pot. This could give you some peace of mind when popping money aside in other accounts that boost returns.
Look for the best rate for your savings
Any cash savings you have should earn the best possible rate.
Start by comparing deals to see which accounts pay the highest rates. Some might offer an introductory bonus, while others may give you a better rate if you agree to keep your money in the account for a set period.
Bear in mind that while easy access accounts let you take out money whenever you need it, the rate can fall as well as rise.
How do fixed rate savings help?
Fixed rate accounts lock in an interest rate for a set amount of time – often one, two or three years – so you know exactly how much you’ll earn. And if interest rates fall, your fixed rate doesn’t change.
These accounts are often the best home for money you don’t need right away. If you’re saving for a holiday or a home improvement in a couple of years, you could lock in a rate. This can help your money keep pace with rising prices.
Review your savings
Review your savings plan every six to twelve months. Check whether your accounts are still offering good rates and whether you could improve your returns by switching or splitting your savings.
Setting up automatic savings is a good way to stay consistent. For example, you could arrange for part of your salary to go straight into your savings each month.
Small changes could make a big difference
Small changes in your rate could add up over time. This is because you earn interest not only on your original savings, but also the interest you earn.
If you get just 1% more on £15,000, this could be an £150 extra each year. Over ten years, that’s £1,500 more in your pocket.
We're here to help
At Coventry Building Society, we understand that your savings go towards your future plans, memories, and peace of mind. Our range of savings accounts can help you stay ahead of rising costs while building the security you need for life’s sunny days.
Your future self will thank you for taking these steps today. After all, even when living costs rise, life’s best moments are still worth saving for.
Related articles:
How saving can boost your wellbeing
In this blog, we explore how saving for a sunny day can help improve your wellbeing.
