A balanced diet is healthier for your finances

We all know about the evils of fatty food and the virtues of ‘five a day', but over the past five years, it's a balanced diet that has been healthier for your finances, according to new research from BM Savings.

Over the last five years (2005 to 2010), a traditional English Breakfast eater has seen prices increase by 33% (£12.40 to £16.55) and a health conscious ‘five a day' person by almost double that at 64% (£5.39 to £8.85).  Those with a balanced diet have been the least impacted with only a rise of 18% (£7.63 to £9.01).

Grapes recorded the largest price increase at 91%, from £2.66 per kg in 2005 to £5.08 in 2010.   This was followed by two English Breakfast items; eggs at 82%, from £1.57 per dozen to £2.86 and butter at 72%, from £0.92 to £1.58.  Potatoes had the second largest increase amongst fruit and vegetables at 63%, from £0.99 to £1.61 per kg.  Beef fillet (£11.93/ kg) and white fish fillets (£11.02/kg) were the most expensive shopping basket items in both 2005 and 2010.

Whilst the price of staple food items has clearly risen over the last five years, consumers have also seen the cost of other everyday items, such as travel, telephones and fuel, increase.  Official figures released by the Office for National Statistics (ONS) show that annual inflation measured by the Retail Prices Index (RPI) has risen for the 16th month in a row to reach 5.5% in February 2011.

To help savers limit the impact of inflation and changes in the cost of living on their savings, BM Savings has recently launched two new Inflation Rate Bonds with a choice of a three year of a five year investment term.  The Bonds track annual inflation as measured by RPI, whilst also offering a fixed interest rate on any balances - of 1.50% Gross/AER on the five year bond and 0.75% Gross/AER on the three year bond. 

Both terms start on 1st June 2011 with the three year bond maturing on 2nd June 2014 and the five year bond maturing 1st June 2016.  The minimum deposit is £500 and the maximum £1m.  Capital is also protected so savers will not lose any of their deposit if deflation occurs.

John Bianco, head of BM Savings, said: "With the cost of everyday living continuing to rise, many savers are concerned about the effect inflation is having on their saving pots.  The Inflation Rate Bonds enable savers to increase their returns helping them limit the impact of annual inflation."