Inflation is eroding the value of my savings

Welcome to the second instalment of our Inflation Series. This time we discuss the concerns of ‘Is Inflation eroding the value of my savings’.

Since the onset of the COVID-19 pandemic, Irish households have experienced significant inflation, impacting the cost of essential goods and services. Understanding these changes is crucial for effective financial planning.

Inflation Trends in Ireland

In 2020, Ireland experienced a slight deflation of -0.33%. However, the following years saw substantial increases in the inflation rate:

• 2021: 2.34%
• 2022: 7.83%
• 2023: 6.30%

As of January 2025, the inflation rate stands at 1.50%. (macrotrends.net, ycharts.com)

These figures illustrate a sharp rise in inflation post-2020, with a peak in 2022, followed by a gradual decline.

Impact on Essential Goods and Services

The surge in inflation has led to noticeable increases in the prices of various essential goods and services:

• Energy Costs: Electricity and gas prices have risen significantly, contributing to higher household expenses.
• Grocery Bills: The cost of food and daily essentials has escalated, making it more expensive to maintain the same standard of living.
• Housing and Rent: Property prices and rental rates have continued to climb, making it more challenging for individuals to afford housing or save for a home.
• Transport and Fuel: Higher petrol and diesel prices have increased the cost of commuting and travel.

These rising costs underscore the importance of proactive financial strategies to protect and grow your savings.

By staying informed and implementing effective wealth management strategies, you can mitigate the impact of inflation on your savings and maintain your financial well-being.

How to Combat Inflation

While inflation is an unavoidable economic reality, there are strategies you can implement to mitigate its impact and protect your wealth:

1. Buy Real Assets

Keeping all your money in a low-interest savings account can actually result in a loss of purchasing power. Investing in real assets that have historically outpaced inflation, such as equities, property, or inflation-linked bonds, can help grow your wealth over the long term.

2. Maximising Tax-Efficient Savings Options

In Ireland, certain tax-efficient investment vehicles, such as pensions allow your money to grow in a more tax-efficient manner, helping to combat the eroding effects of inflation.

3. Review and Audit your own Spending Habits

When prices increase, its usually time to sit down and ask yourself if everything you are spending money on is an essential purchase. You can’t do much about energy costs in the short term, we need heat, we need light etc, but have you checked how many subscriptions you have every month? Do you need, Disney +, Netflix and Amazon Prime? Now is the time to prioritise and only pay for what you value the most.

Protect Your Wealth in an Inflationary Environment

While inflation poses a challenge, proactive wealth management can help safeguard your financial future. By taking a strategic approach to investing, diversifying assets, and making informed financial decisions, you can ensure that your savings continue to work for you.

At Metis Ireland, we specialise in helping clients navigate inflationary pressures and protect their wealth. If you’re concerned about the impact of rising costs on your savings, contact us today on 01 9081500 or info@metisireland.ie to discuss a tailored financial strategy designed for long-term success.

Cian Callaghan

Director Private Clients