Impact of Inflation on Irish Household Savings
A 1 percentage point increase in inflation, rising from 2% to 3%, on a base of €161 billion in savings leads to an additional €1.61 billion in purchasing power lost each year.
Table of Contents
Calculation of Real Value Loss
This calculation is based on the difference in “real value” between the two inflation rates. At 2% inflation, the loss of value amounts to €3.22 billion annually, while at 3% inflation, it increases to €4.83 billion. This results in an incremental annual loss of €1.61 billion.
Breakdown of Losses
- At 2% Inflation: The €161 billion loses €3.22 billion in value per year.
- At 3% Inflation: The €161 billion loses €4.83 billion in value per year.
- The Difference: An extra €1.61 billion is lost annually due to the 1% increase in inflation.
For individual savers, the rise in inflation will have an immediate impact on the value of their money. To demonstrate the impact, MoneyWhizz has developed a calculator that allows users to test various rates of inflation over time.
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