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E-Malt.com News article: UK: A pint of beer may cost £8 by 2060 if prices continue to rise at their current rate - survey
Brewery news

The cost of a pint of beer could reach £8 by 2060 if prices continue to rise at their current rate, a survey by BM Savings has revealed.

According to its report, based on data from the Office for National Statistics, the value of money has fallen by 94% over the past 50 years.

An 18-fold increase in retail prices means that someone today would need £1,796 to have the equivalent purchasing power of £100 in 1960. By the same calculation, £5.57 50 years ago would be worth about £100 today.

The drop in the value of money is reflected in the cost of everyday items such as food and household goods. Calculations show that the price of beer has increased eleven-fold over the past half century, from 11p to around £2.94 today, while a pint of milk cost just 3p in 1960 but will set consumers back around 44p today.

The value of the cash in our pockets eroded at the fastest rate in the 1970s when retail prices increased by an average of 13% a year. They rose the least over the past decade, with an average yearly increase of just 3% since 2000, but even with relatively low inflation £131 at the turn of the millennium is worth just £100 today.

BM Savings said the next 50 years could see the value of cash decline by a further 63% if retail prices follow the government's annual inflation target of 2%. This means a loaf of bread at £1.20 could more than double to £3.23 by 2060.

Basic rate taxpayers need to find a savings account paying 5.01% if they are to counter the effects of inflation; a higher rate taxpayer needs to find an account paying at least 6.67%; while 50% taxpayers need to find a return of 8.01%.

There are no instant access accounts that will match or beat inflation plus tax at the basic rate, but some bonds – especially longer-term fixed products – will match inflation and help prevent the erosion of savers' capital.

A five-year Post Office bond, available until April 27, will pay inflation (as measured by the retail prices index every April – currently 5.3%) plus 1.5 percentage points on top. National Savings and Investments is also to relaunch its popular index-linked savings bonds at the beginning of May.


27 April, 2011

   
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