In October 2022, UK inflation as measured by the Consumer Prices Index (CPI) hit 11.1%. This figure marked a 41-year high. [1]
Since then, inflation has fallen but remains stubbornly above the 2% target set by the Bank of England (BoE). The latest CPI figure, for the 12 months to April 2026, was 2.8%.
Geopolitical events can affect prices at home, and it’s important to remember that the headline rate might not match your personal inflation rate.
Keep reading to find out why this is the case and how to protect your wealth from the effects of rising inflation.
Inflation measures the rising costs of a “basket of goods”
The Office for National Statistics (ONS) compiles a basket of goods and services that it believes best reflect UK consumer spending habits. It then tracks the rising cost of this basket over time.
Annual changes are made to the contents of the basket to reflect changes in spending. For example, in the most recent updates to the basket, croissants were added and baby food was reintroduced. In addition, non-alcoholic beer was added for the first time. [2]
Demand for goods, supply chain issues, and other external factors can all affect the price of the basket over the year. In turn, this can impact your household budgeting and the real-terms value of your wealth.
Your personal inflation rate depends on various factors
When inflation is high, it can impact your household budget in line with your personal inflation rate. This is determined by factors like age, location, and lifestyle.
If you travel to the office or dine out regularly, rising fuel prices or costs in the hospitality sector will affect you. Someone who works from home and rarely eats out might be more adversely impacted by rising energy prices.
When inflation is high, it can reduce your disposable income and lower the real-terms value of your cash savings, so it is important to factor inflation into your long-term plans.
High inflation can lower the spending power of your cash
When inflation is high, you might find that it exceeds the savings rate offered by your high street bank. If prices are rising more quickly than your wealth, that cash is effectively losing value in real terms.
The same is true of wage growth and even the retirement income you receive. If the latter is fixed each year, it will effectively be worth less as prices rise over time.
A pension that paid £1,000 a month in 2020 would need to pay £1,304 in April 2026 to offer the same spending power. [3]
2 practical ways to protect your wealth
1. Shop around for the best interest rate for your cash savings
The average easy access account interest rate rose from 2.42% at the start of March 2026 to 2.49% by May, but this is still below the current rate of inflation. [4]
Meanwhile, the most competitive rate on the market as of 7 June 2026 topped 4.5%. [5]
This could make a significant difference over the course of a year and would see your cash holdings rise more quickly than inflation.
2. Consider investing excess cash for the chance of higher returns
It’s important to maintain an emergency fund of easily accessible cash to tide you over when the unexpected strikes. This should cover around three to six months’ worth of household expenditure.
If you currently hold more than that in cash, you might consider investing the excess.
Investing carries additional risk, but the opportunity for higher returns, too. You will need to ensure you understand your long-term time frame, your attitude to risk, and your capacity for loss.
This Barclays graph shows the relative performance of cash and investments over time, as well as the world events responsible for short-term market dips. [6]
Get in touch
At Titan Wealth, we can help you protect your wealth from inflation, so get in touch now. Email info.wp@titanwh.com or call us on 0800 048 0150.
Please note
This document is for information purposes only and does not constitute personal financial advice. If you are unsure about whether a particular course of action is suitable for you, we recommend that you seek independent financial advice.
The value of investments and the income from them can fall as well as rise, and you may get back less than you originally invested. Past performance is not a reliable indicator of future performance. Tax treatment depends on individual circumstances and may be subject to change in the future. Tax and estate planning outcomes are not guaranteed.
Titan Wealth Planning Ltd is authorised and regulated by the Financial Conduct Authority (FCA reference number: 574458). Registered address: 101 Wigmore Street, London, W1U 1QU, United Kingdom.
