Soaring inflation is not just hurting millions of Aussies at the checkout, but also with their savings goals.
Fresh research from Money.com.au, shared exclusively with SkyNews.com.au, shows almost half of the population do not know if their savings account is delivering above 3.8 per cent – the rate of inflation in the 12 months to December.
Just 12 per cent of Australians say their savings are outperforming inflation while 16 per cent believe their returns are roughly keeping pace.
Another 26 per cent say they know their savings rate is below inflation.
Money.com.au’s finance expert Sean Callery said just under a third of savings accounts offer an interest rate above inflation, meaning “the odds aren’t in people’s favour unless they’re actively seeking out a competitive rate”.
“Inflation is a silent tax on cash savings,” Mr Callery said.
“If prices are rising faster than the interest you’re earning, your money buys less over time.
“When almost half of Australians have no clue whether their savings are going forwards or backwards, it makes it much harder to make informed decisions about where to park their cash.”
The research showed an Australian earning a three per cent annual savings rate, that starts the year with $30,000 and contributes $1000 each month, would end up going back $500 that year.
This is because their account would grow to $43,079 but with inflation eating away at their real purchasing power, the value would sink to $41,500.
Mr Callery said checking how competitive their savings returns were was critical while inflation resurged.
“In times of economic uncertainty, people naturally prefer to keep their money in savings accounts because that’s where it feels safest,” he said.
“That’s fine, but it’s still important to regularly check whether your interest rate is keeping up with the cost of living, particularly for retirees and pensioners who rely on their cash savings to fund day-to-day spending.”
Aussies across all generations reported being unaware of how their savings were tracking against inflation.
Half of generation X said they did not know how they matched up, while 48 per cent of generation Z, 45 per cent of Baby Boomers and 44 per cent of Millennials were not aware.
Older Aussies were more likely to be outperforming inflation with 15 per cent of Baby Boomers surveyed outpacing price rises.
Just eight per cent of generation Z respondees said they were beating inflation while 10 per cent of Millennials and 13 per cent of generation X were outperforming inflation.