Out-saving inflation - how to keep your money moving forward
3 minute read
Out-saving inflation – how to keep your money moving forward
3 minute read
Inflation has been making headlines again over the last few months, and for good reason. Prices are on the rise, and even when your account balance is growing, it doesn’t stretch as far as it once did.
But while we can’t escape the rising cost of living, it doesn’t have to derail your dreams. Whether you’re hoping to travel or simply spend time with family.
We’ve looked at where inflation is now and what it means for savers. So, how can you keep your money working towards your sunny day?
What does inflation mean?
Inflation is often shown as a percentage. It shows us how much prices go up over a year. The government’s target is 2%. But in the year to July 2025, it was 3.8%1 according to the Consumer Price Index (CPI).
The Bank of England thinks inflation will get close to 4% later this year. But then, they expect it to start going down.2 This means rising prices of things like food and energy might slow as we reach the end of 2025.
How does inflation affect your savings?
If your savings rate is lower than inflation, the real value of your money falls over time. Your balance may rise, but what those pounds can buy shrinks.
For example, imagine you have £10,000 in savings earning 2% interest. After a year, that grows to £10,200.
So if something costs £10,000, if prices rise by 3.8% due to inflation, a year later it would cost £10,380.
This mean your spending power has actually gone down, your money doesn’t stretch as far, which is frustrating when you’ve worked hard to save it.
This also highlights the challenge if you’re a fixed rate saver. While these accounts provide certainty, you might be locked into returns that don’t keep pace with inflation.
Building your savings plan
It’s always worth looking at the types of savings accounts that could help your money grow. At Coventry Building Society, we offer a range of options to suit your needs.
- Cash ISAs: Save up to £20,000 each tax year and earn tax-free interest.*
- Fixed rate bonds: Earn a guaranteed rate of interest on a lump sum that you don’t need to access for a while. Fixed bonds could be a great option, provided inflation doesn’t rocket.
- Regular savers and Limited Access: Build your savings gradually by putting money away each month. You can usually take out money if you need to, though there may be a limited number of withdrawals, penalty for withdrawing or notice period required.
The key to choosing the right account is to understand your options. And remember to review your savings from time to time, so they continue to match your plans.
- Regular savers and Limited Access: Build your savings gradually by putting money away each month. You can usually take out money if you need to, though there may be a limited number of withdrawals, penalty for withdrawing or notice period required.
The key to choosing the right account is to understand your options. And remember to review your savings from time to time, so they continue to match your plans.
Can you outpace inflation?
It isn’t always easy, but it’s possible!
You could move your money to accounts paying more than the rate of inflation. But you also may wish to spread your money across different pots. This could make sure you have some savings that are easily accessible for emergencies.
Review your savings
Rates are changing all the time. So be mindful that some accounts and rates that may be available one day may not be available the next when doing your financial planning
Reviewing your rate every so often is a good way to make sure your money is working hard for you – regardless of inflation or your goals. Check if you could get a better return by splitting your savings or switching accounts.
We’re here to help
We know your savings aren’t just numbers on a page. They’re your sunny days – future plans, family milestones and fresh starts.
That’s why our range of savings accounts are here to help you balance flexibility with certainty. View our current savings rates.
Sources:
[1]Source - Inflation and price indices - Office for National Statistics
[2] Source - Monetary Policy Report - August 2025 | Bank of England
Published September 2025
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