How to protect your savings from inflation

The real return on savings is the interest rate minus inflation. If your account pays 4% and inflation is 3%, your real return is about 1%. The aim is to keep each pot of money in the place most likely to beat inflation over the time you will hold it. You can see how inflation erodes a sum over time with our inflation calculator.

For money you will need within one to three years, keep it in cash, but in the best rate you can get. With Bank Rate at 3.75% at the time of writing (October 2026), the top easy access accounts and Cash ISAs pay noticeably more than high street defaults, while many big-bank accounts pay much less. Compare the latest CPI figure from the ONS with the best rates on comparison tables to see whether you are ahead. Rates change often, so review at least once a year; our savings accounts and Cash ISAs guide explains how to compare.

The UK has few savings products that are directly linked to inflation. NS&I Index-linked Savings Certificates are not on sale to new savers; existing holders can only renew them when they mature.

Index-linked gilts are UK government bonds whose payments rise with inflation (RPI, moving to CPIH from 2030). You can buy them through most investment platforms or hold them via funds, but their market price moves with interest rates, so you can lose money if you sell before maturity. They suit people who understand bonds or who are using a fund.

Premium Bonds do not track inflation. The prize fund rate is 4.35% at the time of writing (October 2026), but that is an average: many holders win less, or nothing, in a given year.

Over long periods, a diversified global share fund has historically grown faster than inflation, because company earnings tend to rise with prices over time. The trade-off is volatility: share prices can fall sharply and take years to recover, so this is for money you will not need for at least five years. A Stocks and Shares ISA keeps the returns free of tax.

No single asset class perfectly tracks or beats inflation in all environments. A combination of short-term cash (for near-term needs), bonds (for medium-term stability), equities (for long-term growth), and potentially some real assets (property, commodities) provides protection across different inflation scenarios.