Assetz Capital warns inflation is ‘quiet threat’ to investments

INVESTORS could see a reduction on their returns after inflation rose above the Bank of England’s two per cent target, peer-to-peer business lender Assetz Capital has warned.

The Bank of England’s preferred indicator of inflation, the Consumer Price Index (CPI), increased to 2.1 per cent in July – going above its two per cent target for the second time in 2019, according to figures from the Office for National Statistics (ONS).

Read more: How is the rise in inflation affecting investors? 

The CPI 12-month inflation rate was last measured at 2.1 per cent in April, dropping to two per cent in both May and June.

Rising inflation can particularly affect workers on wage increases below inflation or people with fixed incomes, including retirees.

Inflation also poses a “quiet threat” to investments and savers should consider whether their returns are beating inflation, warned Assetz Capital.

Read more: Assetz: Savers must earn ISA returns of 1.84pc to beat inflation

It added that, while there was more money in tax-free Individual Savings Accounts (ISAs) than ever before, savers are not maintaining the value of their money in real terms if inflation overtakes the rate of return.

The P2P lender, which has lent more than £820m to businesses since 2013, urged investors to check that their projected rates of return are beating the current rate of inflation.

Assetz Capital also offers an inflation calculator on its website to help people work out the real value of savings and investments, taking into account the current rate.