Inflation: Watch the pennies, but not at the expense of the pounds

Our blog is for your general interest. Whether or not it applies to your current financial position, please feel free to share it with friends, family, or colleagues who may be interested.

To make sure you never miss our latest blog, sign up .

May 11, 2022 - Furnley House

Inflation: Watch the pennies, but not at the expense of the pounds

Inflation is a global concern and in the UK we are being warned to brace ourselves for further price rises.

Consumers may be trying to reduce their outgoings by cutting down on the weekly shop or using less fuel, and even though these small savings add up, it is important not to lose sight of the bigger financial picture at these difficult times. This means not getting distracted by saving the pennies, if you haven’t yet ensured you are not losing pounds in your wider financial arrangements.

The end to rising prices is not in sight. Oil and gas prices were already rising rapidly before Russia’s invasion of Ukraine, but the war has pushed prices up further. In turn, this has caused rises in raw material costs for manufacturers and retailers. Food costs have risen too: meats such as chicken, and staples such as pasta are experiencing price hikes which are now being passed on to consumers. With almost every sector of the economy impacted, reviewing your wider finances is important.

Cash savings and premium bonds

It is easy to see the price of goods we buy on a regular basis go up, especially on basic items we buy like groceries or petrol. However, it should be remembered that inflation devalues savings too. The pound currently buys fewer things, and money held in cash savings is not being paid enough in interest to keep up. At the moment the rate of inflation is around 7% yet, according to MoneyFacts, just 1.5% is being paid on the best easy access savings account. This means money held in cash savings accounts and premium bonds (which pay no interest) is fast depreciating in its spending value. Revisiting your savings and considering moving some of that money into low risk investments could better protect your savings.


The Bank of England aims to control inflation by increasing interest rates. The recent rises have been in small increments, and this careful approach has been an attempt to try and balance other concerns about the UK entering a recession.

Mortgage lenders are already bracing themselves for the cost of borrowing to rise and have been repricing their mortgage products in preparation. Some lenders have also tightened their lending criteria, reducing the amount you can borrow or ‘loan to value amounts’ as they are expecting more home owners to face a squeeze in income in the coming months.

A fixed mortgage is a sensible choice for those who can benefit from knowing how much their mortgage repayment will be every month. Repayments will not rise or fall for the duration of the fixed rate period, even if interest rates are increased by the Bank of England. Speaking to a mortgage adviser will ensure that you secure the best rate based on your circumstances. It is important to remember that the cheapest loan rate may not be with your current lender.

Insurance Policies

Reviewing how much you are paying on your insurance policies can be a good way to save money, but it is important you don’t make irreversible mistakes.

Some insurance products can be moved simply, and these can include buildings and contents insurance, as long as you have checked that you are receiving like-for-like cover.

Other products, such as life insurance with critical illness cover, should not be cancelled or moved without first taking financial advice. In many cases, critical illness cover will not cover pre-existing conditions, so any illness or change to your health may be excluded from a new policy taken out.

Speak to a financial adviser before making any decisions you are not confident about. They will be able to best advise you, and in some cases may be able to help you make savings elsewhere in your finances to ensure you keep the most important cover in place.


When you reach the age of 55, you can access up to 25% of your pension savings as tax-free cash. This can offer financial flexibility, which is useful in challenging times, and it can be used to secure other areas of life ahead of retirement, such as paying off an outstanding mortgage.

One of the most important steps to improving your wealth in retirement is to explore all of your retirement income options at this point and not simply accept the income offer made to you from the company you have saved your retirement money with.

A financial adviser can help you to draw together all of your pension pots and give you a clear picture of your total wealth in retirement, and they will provide you with a plan to make sure your retirement savings can best provide you with an income in the future.

Pension savings are often one of the largest investments a person holds. It is important to take financial advice from a FCA regulated financial adviser and to be guarded when receiving unsolicited letters offering to help access or invest your pension money.


Our team of advisers at Furnley House are able to help you review many aspects of your financial planning and are here to help. To find our more call 0116 269 6311 or email





Past performance is not a reliable indicator of future performance.

The value of an investment and the income from it could go down as well as up. The return at the end of the investment period is not guaranteed and you may get back less than you originally invested.

All information correct at time of writing.