NS&I 2022: Martin Lewis issues warning as Premium Bonds not ‘likely to beat’ inflation | Personal Finance | Finance

On his website moneysavingexpert.com, Martin Lewis provides vital advice for people across the country who are looking for guidance on how to properly save for their futures. In regards to the recent rise in inflation, the financial journalist shared how Premium Bonds, which is managed by National Savings and Investments (NS&I), has been affected. Inflation is the term used to describe the rate at which prices rise and in the last 12 months to January 2022, prices increased by 5.5 percent on average.

On his site, Mr Lewis explained: “If you save money anywhere and it doesn’t grow as quickly as prices are rising, then in real terms your savings are actually shrinking not growing.

“Inflation is the measure of prices rising, so if your savings pay more than inflation then they’re growing, if not they’re shrinking.

“We saw a sharp fall in inflation when the coronavirus pandemic hit, which meant that the published Premium Bonds rate was higher than the inflation rate – an unusual situation.

“However, the economic recovery and well-publicised issues in securing supply of certain goods has led to price rises, which have now fed into inflation rates.”

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While Premium Bonds have been hit by the impact of inflation, Mr Lewis acknowledged that every savings account has seen their rates being affected by the changes in the wider economy.

The financial journalist added: “Unfortunately, with savings rates as low as they are, there are very few places you can save at a higher rate than inflation.

“Despite this, you should still get the best bang for your buck where you can – if you’ve £5,000 or more to save, Premium Bonds are likely to be a better option than standard easy-access savings.”

Premium Bonds are noticeably different from other savings products as holders are automatically entered into a monthly prize draw where they can win between £25 and £1million in tax free cash.

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For February 2022, there were two Premium Bonds millionaire winners: one from Leeds and the other from Essex.

On their victory, Jill Waters, NS&I Retail Director, said: “A huge congratulations to our Premium Bonds jackpot winners in Leeds and Essex. ERNIE has brightened up 2022 with a truly life changing sum of money.

“Aside from the two £1million winners, ERNIE will be paying out more than 3.3 million tax-free prizes, sharing the love of Premium Bonds prize wins up and down the country.

“It’s not too late to start a savings habit for 2022, as people can invest in Premium Bonds from just £25.”