Savers should ask themselves why they are staying in cash
The Bank of England's decision to switch 70pc of its staff pension fund into index-linked gilts was a heavy hint about what to expect.
Worse still, no less an authority than the Governor of the Bank of England forecasts that inflation will continue to rise, when this month's increase in Value Added Tax (VAT) has its inevitable effect on prices.
While the nominal figures themselves look like pretty small beer to anyone who can remember the 1970s, this insidious disease of money remains a real threat to savers – who, let's remember, outnumber borrowers by six to one.
If the Consumer Prices Index (CPI) were to remain at its new level of 2.9pc – compared to 1.9pc a month before – it would take less than 25 years for you to need £2 to buy what £1 buys today.
While some comfort can be drawn from the fact that the Retail Prices Index (RPI) is running at only 2.4pc per year, this measure of inflation is rising even more rapidly than the CPI; having jumped from only 0.3pc.
None of this will come as any surprise to regular readers. As pointed out in this space several times last year, the Government's policy of "quantitative easing" was bound to boost inflation – as printing money has always done in the past.