87 Per Cent Of People Are Concerned About The Effect Of Inflation On Their Income

Key points

Today’s inflation decrease willcomfort the 87 per cent of people who are concerned about the effect of inflation on their income, according toPost Office Savings1.

Today’s inflation decrease willcomfort the 87 per cent of people who are concerned about the effect of inflation on their income, according to Post Office Savings1.

Latest research further reveals a third (33 per cent) of people believe inflation will rise within the next three years however an optimistic 15 per cent believe it will go down.  Despite these views, there still remains a lack of knowledge surrounding inflation with a surprising 53 per cent of people admitting they do not know what the current inflation rate is.

Richard Norman, director of savings and investments at Post Office,said: “Today’s inflation announcement will serve as a welcome relief for UK savers. With 87 per cent of people concerned about how inflation is affecting their income, today’s announcement will provide some reassurance for their concerns.

“With RPI at 3.7 per cent today, is still higher than the 10 year average of 3.1 per cent and five year average of 3.5 per cent. * With this in mind and base rate still at an all time low, savers are finding it difficult to get a real rate of return. However, it is still possible for savers to protect themselves against the eroding effects of inflation on their savings.

“In uncertain times, it’s important to offer consumers peace of mind with their savings and our Inflation Linked Bonds can form part of a balanced portfolio of savings and investments. It offers people a return pegged to the annual rate of RPI inflation with a fixed interest rate added on top, meaning people can be rest assured their return will always be above inflation.”

Post Office offers two fixed term products:

  • Three year term – offers annual RPI inflation rate plus 0.25% gross 0.24% AER** fixed each year, paid at maturity
  • Five year term – offers annual RPI inflation rate plus 0.50% gross 0.49% AER** fixed each year, paid at maturity.

- ENDS -

Notes to Editors

1Research conducted by Opinium Research on behalf of Post Office between 17th - 20th February 2012 among 2,278 Nationally Representative (UK adults aged 18+).

 The fourth issue of the Post Office Inflation Linked Bond is open to applications until Thursday 29 March 2012.

Applications can be made via post and application packs can be requested by calling 0800 169 7500 or downloaded online by visiting www.postoffice.co.uk/savings.

Forms must be posted in time to be received by the Post Office by Thursday 29 March at the latest.  The bond may be withdrawn earlier if it is oversubscribed before this date.

The bond can be opened with a single deposit of £500 (minimum investment £500 and maximum £1 million) with the return calculated annually and paid at maturity.  No additional deposits are permitted.  The account cannot be accessed until the end of the fixed term.

To find out more about the Post Office Inflation Linked Bond or any other savings product, call 0800 169 7500 or go to www.postoffice.co.uk/savings.

Full product details:

  • Fixed term beginning Friday 27 April 2012, for either three years or five years and one day
  • Five year and one day term - return of RPI plus 0.50% gross/0.49 AER* fixed each year
  • Three year term - return of RPI plus 0.25% gross/0.24% AER* fixed each year.
  • If RPI is negative in any year, the annual return for that year will be the fixed rate (0.5% gross for the five year term or 0.25% gross for the three year term)
  • All returns are paid at maturity
  • One lump sum deposit only - minimum £500, maximum £1,000,000
  • No additional deposits or withdrawals during the fixed term
  • Early closure permitted in exceptional circumstances, subject to a charge (meaning customers could get back less than their original investment

For more information, please contact:

Stuart Taylor   Post Office Press Office      02920 392 572     07715 480 146

stuart.taylor@postoffice.co.uk

* 10 year RPI inflation average calculated using monthly figures from February 2002 – January 2012 and 5 year RPI inflation average from February 2007 – January 2012

**Gross rates do not take into account deductions of Income Tax. AER stands for Annual Equivalent Rate and illustrates what the interest would be if interest was paid and compounded once each year.

www.postoffice.co.uk

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