6th May 2011
The consumer prices index (CPI), the government's preferred inflation measure, stands at 4%, reports the Guardian but remains at double the Bank of England's target of 2%. This is worrying news for investors, who could see their portfolios suffer as well as the cost of living increase.
Economists agree savers need to prep their portflios for a period of higher inflation.
Simon Ward , chief economist at Henderson said inflation remains stubbornly high due to, "a combination of developing nations' demand for commodities, and reckless money creation over the past two years."
Azad Zangana, European economist at Schroders, expects CPI inflation to rise further over the coming months as additional costs from rising oil prices are passed on to consumers. He says: "Indeed, despite the cut in petrol and diesel duty announced in the Budget, energy prices rose 1.8% in March, taking the annual rate to 10.1% – the highest rate since December 2008"
Yet while inflation can have a nasty effect on your wealth, taking the stuffing out of your savings, investments remain attractive if you pick wisely – and diversify.
After all, over the long-term the only way you can beat inflation is by taking a risk and investing your money.