Should we be worrying about inflation? Retail prices index inflation (RPI) spent 2012 fluttering up and down between 2.6 and 3.9 per cent, and currently sits at an unremarkable 3 per cent. But while there is little sign of drama in the short term, some commentators (including the IC's Alistair Blair in his final column) foresee a sea change towards higher inflation in the longer term, with governments embracing rising prices as the most effective and least contentious means of eroding their enormous national debts.
SAVINGS PROTECTION ELUSIVE
That prospect is a big potential problem for savers, and particularly retirees who depend on investment income. "Since 2008, inflation has caused prices to rise by 14.7 per cent, so someone who retired last year would need an annual income of £21,400 to have the same buying power as someone who retired in 2008 on £18,700," says Vince Smith Hughes, Prudential's retirement expert.