The rising cost of goods and services has an impact on the money you save or earn. Inflation erodes the spending power of money you’ve got saved and – unless you get a pay rise – of your salary.<\/p>\n
Analysts say the latest inflation data strengthens the likelihood of a cut in interest rates by the Bank of England’s Monetary Policy Committee on Thursday.<\/p>\n
That should make it cheaper for consumers to borrow money, but bring lower returns for savers.<\/p>\n
“Lower inflation is good news for household budgets, but it is a different story for savers,” said Sally Conway, savings commentator at Shawbrook Bank. <\/p>\n
“Some savings will inevitably take a hit over Christmas. The key is what happens next. Once the dust settles, it’s worth checking whether remaining cash is working hard enough.”<\/p>\n
Policymakers are trying to encourage more people to invest their money in stocks and shares – which they say is likely to bring higher returns over time than cash savings.<\/p>\n