This means no amount saved in cash accounts in the last 10 years can buy as much today as when it was first put in, no matter when that money was deposited.
The cumulative effect of inflation has reduced the purchasing power of that £7,857 to £6,638 – an inflation tax of £1,043.
Those who have saved £64 per month for 18 years, perhaps for university, would have earned just £1,182 in interest since September 2004, but the return (or profit) on a similar investment in stocks and shares would be £25,221.
After inflation, cash savings would have lost significant purchasing power over this period, more than offsetting the interest earned.
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