The news is proudly announcing that inflation has returned to the Bank of England's target. Politicians are patting themselves on the back. Yet, when you look at your bank account, you feel poorer than you did three years ago. Why?
Because falling inflation does not mean falling prices. It just means prices are rising slower than they were before.
The Compounding Reality
The 15% to 20% price increases we absorbed over the last few years are baked into the system. Your grocery bill is not going back down. That is the new baseline.
If your salary hasn't increased by 20% over the same period, your real-world purchasing power has shrunk. This is why you must aggressively manage your career to increase your income, and why your investments must outpace inflation. Relying on savings accounts to build wealth is a guaranteed way to lose ground.