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Inflation's impact on savings 'remain unclear to many'

Many people do not know that inflation erodes the value of cash savings, it has been claimed.New research from National Savings & Investments (NS&I), shows that 31 per cent of consumers, though they know what inflation is, do not know how it impacts on their savings.However, older people were found to be better informed: just 17 per cent of 55 to 64-year-olds confessed to not knowing, compared to 41 per cent.When the groups were asked about the effect of tax on savings, the "don't know" figures stood at 16 per cent and 45 per cent respectively.Commenting on the figures, John Prout at NS&I said: "It appears that an understanding of the impact of inflation and tax on savings increases as we get older. The younger generations, who have grown up in a time when the economy has seen low levels of inflation need to also be aware of the effect of inflation on our savings as well as our outgoings."He added: "It is concerning that many people don't understand what inflation is, or how it might affect decisions about saving or spending money. "It can be caused by increases in salaries, increased demand for items or a decrease in supply which all push prices up."

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