Savings and Inflation: How Much Money We’ve Lost in the Past Years

The Impact of Inflation on Savings: Understanding the Erosion of Purchasing Power

Since the 1980s, we have not seen such a powerful wave of price increases: inflation, starting from 2022, has swept the world like a hurricane, leaving behind a trail of soaring prices and increasingly empty wallets.

The causes of this phenomenon are not a mystery: the war in Ukraine, the surge in energy prices, and the expansionary monetary policies adopted to combat the Coronavirus pandemic have created an explosive mix that has skyrocketed the costs of goods and services.

The consequences? A real disaster for our investments, but above all for our savings.
As we have been repeating for some time, inflation mercilessly affects that asset class that many, wrongly, consider the safest: cash.
Keeping money under the mattress is only an illusory security.

For many, the impact of this phenomenon remains invisible.
We look at our current account, yesterday’s 10,000 euros are still there.

But how much is the money we have set aside today worth compared to a few years ago? To find out, we decided to calculate the erosion of the purchasing power of our savings from 2022 to the present day.
The results that emerge are nothing short of shocking and will leave you breathless.

Calculating the Impact of Inflation on Savings

If kept under control, inflation does not pose a serious threat.
On the contrary, a slight increase in prices can only benefit the economy.
The European Central Bank itself has set an annual inflation target of 2%.
This target, as specified in ECB documents, is considered “favorable both to economic growth and price stability.” However, uncontrolled inflation, as has happened in recent years, can have devastating consequences.

So, how much money do we lose due to inflation? To understand the real impact of this phenomenon, it is necessary to resort to a process called “monetary revaluation.” This operation allows determining the current value of a sum of money expressed in a past currency.
In simple terms, monetary revaluation allows adjusting the purchasing power of a sum of money to the current cost of living.

Calculating Monetary Revaluation in Recent Years with ISTAT’s Tool

ISTAT offers a valuable online tool called “Rivaluta,” which allows for easy calculation of monetary revaluation.
This tool is based on the FOI index (consumer price index for blue and white-collar workers) to determine percentage changes over time.

To calculate the revaluation, simply select the period and the amount to be revalued (in euros or lire).
For example, we tested the tool for a period slightly over 2 years, from January 2022 to May 2024 (last available data) on an amount of 100,000 euros.

The result, although predictable, was truly significant: 100,000 euros in 2022 have a purchasing power equivalent to 111,000 euros today.
In simple terms, this means that over the course of a few years, due to inflation, an additional 11,000 euros would have been needed to purchase the same amount of goods and services.

How to Counteract Inflation Through Investments

In conclusion, inflation represents a significant threat to the purchasing power of our savings.
To counteract this phenomenon, it is essential to invest our money in a way that yields a return at least higher than the inflation rate.
The higher the return, the greater the real gain.

Capital Accumulation Plans (CAPs) offer a simple and accessible method to start investing, even with small amounts of money.
Through the periodic payment of a fixed amount, CAPs allow building a diversified investment portfolio over time, benefiting from the effect of weighted average cost.

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