Following the Bank of England’s warning that higher food prices may be here to stay, financial experts at Money.co.uk have provided us with some timely advice on how best to prevent this from destroying your savings.
ONS data¹ shows that over the last few months, the food inflation rate has gradually decreased after hitting a high of 19.2% in March – but shop prices were still 7.6% higher in July than last year.²
Despite the trend of a gradual return to lower food prices, the Bank of England’s chief economist Huw Pill commented earlier this week that a return to cheaper food is “something we may not be seeing for a while yet, if in the future at all”.
Savings experts at money.co.uk have revealed how you can minimise the negative financial impact of this and maximise your savings despite higher outgoings on food compared to previous years.
Savings accounts expert at money.co.uk, Lucinda O’Brien, says, “The persistence of higher food prices will no doubt have a negative impact on savings for most, as we are increasingly forced to save less or dip into savings to afford our supermarket bill.
“The first thing to look at to help minimise the negative financial impact is exactly how much you’re spending on your food shop each week and what products are eating up most of that cost.
“It’s worth considering switching some branded products to supermarkets’ ‘own’ versions and shopping in the reduced section to help cut costs, as well as being resourceful with the food you already have in the cupboards, as you can likely put some meals together at no additional cost.
“Once you’ve established a realistic monthly food budget, it’s wise to put this money to one side as soon as you get paid to avoid any nasty surprises towards the end of the month – by putting these changes into place, you can regain control of your money and minimise the impact on your savings.
“But with the cost of necessities remaining high, it is likely that you may need to dip into your savings at some point, and that is okay.
“An instant access savings account will allow you to withdraw money as and when you need to, without incurring any penalties, so you are still building your savings and earning interest on your money without locking it away when you might come to need it.
“For example, Tandem Bank is currently offering a 5% AER variable on their instant access saver account that has no notice, penalties, charges or limits on withdrawals, making it the perfect cost-of-living-proof savings account.”
For more information and guidance on saving, visit money.co.uk/savings-accounts.
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