Morning View: Savers now see their lump sums plunge in value

Inflation has now reached truly disturbing levels in the United Kingdom.

It was revealed yesterday that the Consumer Prices Index had hit 11.1%, higher even than experts forecast.

This means that the cost of living has increased at the fastest yet pace in 41 years. Back then, we were still taming inflation, which ran rampant in the 1970s.

Prices were soaring at that time on both sides of the Atlantic, but it was worse here than in America, as it worse here now.

Such a rapid rise in costs cause multiple problems, including at its most basic level stability. When inflation gets out of control, as in a number of countries such as Zimbabwe and Venezuela, it causes disastrous instability including a loss of confidence in a currency.

Sterling is a long way from such a fate, and some pundits expect prices to begin to ease. But financial forecasters have consistently been wrong about major global events, including the 2008 financial crisis.

One unfashionable group of people suffers badly from high inflation –savers. They are rarely the focus of government or media concern, in the way that borrowers are, yet savers are the sort of people who form the backbone of society.

They are typically the sort of folk who work hard, provide for themselves and loved ones without asking for external support, and who spurn the purchase of material objects that they cannot afford.

Yet savers have in effect paid a big tax to help bail out those who borrowed too much to buy houses or cars. Anyone with cash in a bank since interest rates were slashed in 2008 has seen it fall 20%+ in real terms.

London is rightly focused on helping people who are struggling to buy necessities during the cost of living crisis but sky high inflation is a reminder that savers, who have long lost out, are losing even more now.