Jane Austen and inflation: The incredible shrinking ten pound note

Aviva’s Alistair McQueen shares his thoughts on the decreased purchasing power of the ten pound note — now just 13 pence when compared to what it could buy in 1817.

Today (18 July 2017) marks the launch of the new ten pound note, featuring Jane Austen on the 200th anniversary of her death in 1817 (1). New data today from the Office of National Statistics also reports that inflation (CPI) now sits at 2.6% — exceeding the Government’s 2% target for the fifth month in a row (2). Analysis from Aviva shows how inflation has shrunk the purchasing power of ten pounds since 1817, by nearly 99 per cent (3).

The new 13 pence note

Today, ten pounds has a relative purchasing power of only 13 pence, compared to what it could buy in 1817. If the Bank of England had wanted today’s new ten pound note to have the same purchasing power it enjoyed in 1817, it should be revalued as the £786 pound note.

Commenting on the incredible shrinking coin, Alistair McQueen, Head of Saving and Retirement said:

“Today it was confirmed that inflation has exceeded the Government’s 2% target for the fifth month in a row, after three years of below-target reporting. And recent research from Aviva found ‘price increases’ to be the number one financial concern amongst parents in the UK (4).

“Inflation silently shrinks the value of our hard-earned cash. Today’s new ten pound note allows us to powerfully demonstrate the impact of inflation over time.

“In Mansfield Park, Jane Austen wrote “A large income is the best recipe for happiness I ever heard of.” With cautious budgeting and careful investing, inflation need not mess with that recipe.”

1. Source: http://www.bankofengland.co.uk/banknotes/Pages/characters/austen.aspx

2. Source: https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/june2017#the-cpih-inflation-rate-fell-for-the-first-time-since-april-2016-but-remains-higher-than-in-recent-years

3. Aviva research: Analysis of the relative purchasing power of one pound, based on official ONS ‘composite price index 1800 to 2016’, published on 18 July 2017 — https://www.ons.gov.uk/economy/inflationandpriceindices/datasets/consumerpriceinflation

4. Source: http://www.aviva.com/media/news/item/uk-stretched-to-the-limit-half-of-uk-families-cannot-survive-a-month-on-their-savings-if-ill-health-strikes-17749/

First published on LinkedIn.

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