Although recent reports suggest that Brits won’t save because of rising debt levels and the damage that the credit crunch is doing to disposable income, it seems that those who choose to put aside some of their money are unaware about the effects of inflation and tax on their savings.

According to research from National Savings and Investments (NS&I), the government-backed savings and investments organisation, almost a third do not understand the impact inflation and tax has on their savings and 1 in 10 do not know what inflation is.

John Prout, NS&I’s Sales Director commented: “It is concerning that many people don’t understand what inflation is, or how it might affect decisions about saving or spending money.”