Inflation in the UK is rising at an alarming pace. Official data today showed consumer price inflation (CPI) hit 5.1% in November, up almost a full percentage point from October. Prices are tipped to keep soaring in 2022 too as product supply issues linger and energy costs soar.
This creates a particularly worrying issue for savers. It means the value of the money they have locked away is diminishing at a staggering pace. And analysts believe that the issue will persist even if the Bank of England acts soon.
“Even if a base rate rise is imminent, any subsequent increase to interest rates on things like simple savings accounts will fall far short of where inflation sits,” says Colin Dyer, client director at abrdn.
He added: “Savers need to consider all options to make sure that their money is keeping pace with, or outpacing inflation. Anything less means their funds will slowly but surely be eroded in real-terms, every day buying that little bit less.”
UK shares to help me beat inflation
This is why I think it’s extra important for me to own UK shares right now. Okay, more cyclical stock sectors like retailers and travel could suffer if consumer spending power is damaged by surging inflation. But I can buy many stocks which allow me to capitalise on rising prices, instead of being a victim.
For example, prices of precious metals tend to rise when inflation jumps. I have an opportunity to exploit this and make decent returns by buying gold and silver producers like FTSE 100-listed Fresnillo. Prices of other non-safe-haven commodities also increase at times like these, which is why buying stocks like copper miner Antofagasta and platinum producer Jubilee Metals could be another good idea.
More rock-solid British stocks
Rising global inflation also often helps profits at banking stocks like HSBC and Santander. This is because these firms can earn more on their lending activities when central banks raise rates to curb price rises. Finally, owning real estate stocks is another good way for me to make money from the inflation boom. This is because property prices and rent levels move higher when broader inflation increases.
I’m confident my stake in warehouse operator Tritax Big Box REIT will therefore help protect me against the inflationary wave. There are many other property stocks I can buy to give me added insulation too, from healthcare facility operator Assura and student accommodation giant Unite to residential property landlord Grainger.
Of course, one advantage of savings accounts is that they provide a guaranteed return unlike stocks. Share prices can go down as well as up. And there’s a broad range of economic as well as company-specific factors that can send prices sinking. Still, I believe there remain many UK shares I think could help me make decent money from the inflation boom. And experts like The Motley Fool can help me to dig them out.