Expert flags up inflation risk for wealthy

Britain’s private banking services customers have yet to recognise the risks posed by inflation, a financial expert has suggested.

Jason Butler, certified financial planner for Bloomsbury Financial Planning, said today that around a third of clients and investors had ’no clue’ about the threat.

The comments follow the release of an OECD report, showing that UK consumer price rises are trending considerably higher than those in other developed economies.

While inflation stood at over two per cent in Britain according to latest results, Germany experienced flat growth and the US a decline of over one per cent, due in part to the negative pressure put on asset prices by the global economic downturn.

Meanwhile, some analysts worry that central bank programmes aimed at staving off the deflationary threat, such as the Bank of England’s £125 billion quantitative easing programme, could lead to rapid price rises in the future.

In turn, this would help to erode the value of cash savings, significantly diminishing wealth for those with larger deposits.

Mr Butler said: ’I think particularly affluent and wealthy people can be lulled into a false sense of security [about inflation].’

He added: ’The biggest risk is inflation. I think clients and investors fall into three groups: those that haven’t a clue and actually a big inflation risk, those that are in denial and seem to think that’s it not an issue, and those that really do understand. It seems to be about a third in each.’ ADNFCR-2318-ID-19251493-ADNFCR