Jul 23 2008
People interested in saving for children may be urged to read up on the effects of inflation and tax.
A survey released by NS&I has shown 31 per cent of people do not understand how inflation impacts their savings, while nine per cent said they had no idea what it is at all.
Furthermore, 28 per cent of those questioned said they did not know how tax may affect money saved for the future.
Sales director of the company, John Prout, described the figures as "concerning".
"Inflation means that prices increase over time, so £100 today will buy you a little bit less in a year's time. It can be caused by increases in salaries, increased demand for items or a decrease in supply which all push prices up," he explained.
People are more interested in how their shopping basket is affected than their money in cash ISAs or investment trusts, Mr Prout suggested.
The research also found understanding of inflation and tax increased with age.
