How to beat the rise in inflation
If you have to deposit lump sums, and if you are a basic rate taxpayer, there is only one account beats the combined effects of inflation in the CPI is a link: Coventry building society, plus tax for a five year fixed 4.75%. However, given the interest rates, you may want to hold off this time locking the money to start rising as soon as possible.
Where can I get a decent rate on my savings?
If you have a lump sum to deposit and you are a basic rate taxpayer, there is just one account which beats the combined effects of CPI inflation plus tax: a bond from the Coventry building society fixed at 4.75% for five years. However, you may want to hold off locking in your money for that length of time, given that interest rates could start rising soon.
If you are still building up a lump sum, consider a regular saver’s account. HSBC’s version pays 10% with a maximum deposit of £250 a month, though you have to be an HSBC Premier, HSBC Advance, HSBC Graduate (Advance) or HSBC Passport customer. Current account holders with the bank can get a rate of 5%.
Will my mortgage be affected?
Ultimately, yes. The Bank of England’s monetary policy committee will be forced, probably sooner rather than later, to raise the base rate to combat rising inflation. The knock-on effect will be higher mortgage rates: tracker and standard variable rate loans will rise in line with the base rate, and the cost of fixed-rate mortgages (determined by the rate at which banks lend to each other) has already started rising in anticipation.
Moneysupermarket.com has calculated that someone with a 25-year £150,000 repayment tracker mortgage at 2.17% will currently pay £648 a month. A 0.25% increase in the base rate would see their repayments rise by £19 a month. However, if the base rate climbs by one percentage point they would be paying £725 a month – an increase of £77.
Will it affect petrol prices?
The cost of buying fuel for your car has increased by about £300 over the last year – £100 extra in tax rises and £200 for the inflated price of petrol and diesel, according to the RAC.
Minimise the amount you use by keeping your tyres inflated to the correct pressure, ditching unnecessary and heavy items from the boot and driving smoothly at about 50mph where speed limits allow, even on motorways.
How can I lower my food bills?
The cost of a basket of 20 staple items rose by just 1% last year, according to mysupermarket.co.uk, but this figure hides huge variations. While coffee dropped by 10%, tea increased by 22%. Basmati rice and potatoes fell by 10% and 5% respectively, while salad tomatoes went up by 15%, oranges by 20% and grapes by 40%.
Cut the cost of your shopping basket by checking prices at the different stores before you go at mysupermarket.co.uk. Keep an eye on Aldi and Lidl – they don’t have websites but often undercut the other supermarkets.
Where are the best high-street deals?
Use discount vouchers. In the last year a host of voucher specialists have sprung up offering money off goods and services in stores and restaurants. Providers such as Vouchercloud, MyVouchercodes.co.uk, Vouchercodes.co.uk, and the Guardian’s own Voucher codes site offer discounts including 25% off your food bill at high-street chain restaurants such as Strada, free trials at gyms such as Fitness First, and 50% off bestselling books at Waterstones.
Are there any other online deals available to beat inflation?
Use crowdsourcing websites to get good deals on goods and services. When registering (usually for free), you input your local area and every day you are sent an email with potential local and national money-saving deals. If enough people sign up for the offer, the deal becomes available.
Typical deals from Groupon, Living Social and Chiconomise include discounted hairstyling, spa visits and teeth-whitening, while Incahoot.com offers deals on utilities, broadband, landlines and mobiles.