Inflation: A Stealth Tax

truflation 27 July 2023.jpg

Inflation can often be perceived as a 'stealth tax'.

You might be pleased to have secured an interest rate on your savings as high as 5%. Congratulations on that 🎉

However, here's a reality check...

If the current inflation rate of 11% per annum persists in the UK (and it has been quite persistent so far), you are still experiencing a loss in purchasing power.

To illustrate this, consider this scenario: £100,000 deposited in an account with a typical interest yield of 1% will see its purchasing power halve to £50,000 in approximately 6-7 years at current inflation rates. If your bank interest rate is as high as 5%, the value of your account would halve in around 12 years.

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We live in Pakistan and the rate of inflation here is almost 40% and everything has become more expensive. Poor people can't even buy it.

you are lucky that you are only facing 11 % inflation, our inflation rate has crossed 40 and we are also paying each and every tax including in anything we purchase.

Yikes, where abouts are you?