As prices continue to spike, is now the time to start saving?
![Prices up, savings key](https://cdn.mozo.com.au/images/atwood/15389/GettyImages-1688767689.jpg)
High inflation persists around the world, a tiring narrative for anyone simply trying to buy groceries or cover the bills. Why is it so hard to get control of this thing?
Petrol, rent and electricity prices have all been up in the last few months to the end of September and so it doesn't feel like the situation is improving for Aussie consumers.
The Australian Bureau of Statistics noted that a number of key costs for households have risen on the previous quarter, including for insurance, dental services and rents. And while eating out wasn't as expensive as in the June quarter, it remains high.
But that's the issue isn't it - even if inflation steadies or drops, prices remain high. It's not like we're suddenly getting discounts on these price hikes. I keep reading the phrase in news stories that the increase of such-and-such a cost wasn't as high in the last quarter. Great - but it still increased!
Why does inflation persist?
There are some economic factors that create this ongoing inflation challenge and they can get a bit confusing. So let's consider them briefly and simply here.
At the root of inflation is the supply - demand equation, where demand outpaces supply. But maybe the more interesting question is why does demand jump anyway?
Economists look at three factors - major disruptions to supply, more money in people's pockets and expectations. The first two seem self-explanatory but expectations are a bit of a funny one. I had to turn to the Harvard Business Review for a lowdown on this: it says that if everyone knows demand will increase because there's more money in pockets, then supply will increase to match it. This is logical. But an unexpected increase in demand or decrease in supply will apparently set off inflation, essentially tipping expectations on their head.
A further point here is that the Reserve Bank and other central banks around the world work at keeping expectations in check. They want to keep the mood steady, so to speak. This is a tricky task as we've seen though, because when global events unsettle the equilibrium of things, the economy operates at close to full employment and people keep spending even though the "cost of living" persists, the balance of supply and demand is harder to get a read on.
So here we are, approaching the end of 2023, still paying a lot for petrol in our cars, energy needed for our homes and many supermarket staples. Oh, and our rents and mortgage repayments only seem to climb. So the Reserve Bank will surely move interest rates up again, as one way to get the inflation situation a bit more under control. When rates go up, borrowing money costs more and the hope is that some of the heat of persistent demand is cooled. This would, in theory, put a firmer hold on price rises.
We'll see how that goes, but in the meantime, higher interest rates could present a better opportunity to save because as interest rates rise, savings rates should rise with them. There is a school of thought that parking money in a savings account during times of high inflation is counterproductive because put simply, many of the savings interest rates offered of late - typically hovering around 5% - have been lower than the inflation rate of 5.4% (as of October 31).
Yet in tougher economic times it's also sensible to adjust your thinking. Yes, a lot of stuff costs more, including abnormally pricey milk and cheese, and endlessly high petrol prices - but that's the very reason savings can matter. We don't have a handle on these price fluctuations, which also greatly impact our ability to afford a roof over our heads. So we need to think about the rainy day fund in case another price spike occurs and we're caught out. Where possible, stashing some of your money can offer some peace of mind that you can weather the storm.
And furthermore, more interest rate hikes should help savings rates go up too, while presumably, the inflation rate will begin to dip again. That's a good situation or at least a better one than we've seen this year.
If you're keen to compare savings accounts, you can start by reviewing a few of the best on the market below.
Compare High Interest Savings Accounts
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Mozo experts choice awards won:
- High Interest Savings - 2024
Savings Maximiser
5.50% p.a. (for $0 to $100,000)
0.55% p.a.(for $0 and over)
Yes up to $250,000
For customers who have an Orange Everyday account, deposit $1000 into a personal ING account, make 5 eligible transactions and grow their nominated Savings Maximiser account each month.
Great variable rate every month when you grow your balance each month in addition to other eligibility criteria. No ING fees to pay. Save even more with ING Everyday Round Up. Mozo Experts Choice Awards Everyday & Savings Bank of the Year winner for 2024.^
CompareCompareSavings Maximiser
Great variable rate every month when you grow your balance each month in addition to other eligibility criteria. No ING fees to pay. Save even more with ING Everyday Round Up. Mozo Experts Choice Awards Everyday & Savings Bank of the Year winner for 2024.^
- Maximum rate
- 5.50% p.a. (for $0 to $100,000)
- standard interest rate
- 0.55% p.a.(for $0 and over)
- Govt Deposit Guarantee
- Yes up to $250,000
- account fee per month
- $0.00
- Maximum rate conditions
- For customers who deposit $1000 from an external source into a personal ING account (excluding Orange One and Living Super), make 5 eligible transactions and grow their nominated Savings Maximiser account each month so there is more in the account at the end of the month than there was at the start of each month (excluding interest). The total bonus interest rate is available on balances up to $100,000 on one Savings Maximiser the next month after meeting eligibility.
- Access
- Phone banking, Internet banking
- Minimum balance
- $0.00
- Other restrictions
- Must be linked to an Orange Everyday transaction account to receive the bonus rate. Where multiple Savings Maximiser Accounts are held, the bonus rate is only applied to one nominated account.
Read our Mozo Review to learn more about the Savings Maximiser
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Reward Saver Account
5.25% p.a. (for $0 to $1,000,000)
0% p.a.(for $0 and over)
Yes up to $250,000
Intro bonus rate of 5.25% for balances up to $1,000,000 for the first 4 months, reverting to 3.25%. Minimum deposit of $50 and no withdrawals.
Introductory bonus rate for balances up to $1,000,000 for the first 4 months. Minimum deposit of $50 and no withdrawals. Start your account online in under 10 minutes and earn interest on balances up to $1,000,000 (T&Cs apply). No monthly account fees, helping you save smarter and faster.
CompareCompareReward Saver Account
Introductory bonus rate for balances up to $1,000,000 for the first 4 months. Minimum deposit of $50 and no withdrawals. Start your account online in under 10 minutes and earn interest on balances up to $1,000,000 (T&Cs apply). No monthly account fees, helping you save smarter and faster.
- Maximum rate
- 5.25% p.a. (for $0 to $1,000,000)
- standard interest rate
- 0% p.a.(for $0 and over)
- Govt Deposit Guarantee
- Yes up to $250,000
- account fee per month
- $0.00
- Maximum rate conditions
- Intro bonus rate of 5.25% for balances up to $1,000,000 for the first 4 months, reverting to 3.25%. Minimum deposit of $50 and no withdrawals.
- Access
- ATM, EFTPOS, Visa Debit, Cheque book, BPay, Branch access, Phone banking, Internet banking, Bank@Post
- Minimum balance
- $0.00
- Other restrictions
- -
Read our Mozo Review to learn more about the Reward Saver Account
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Savings Account
5.35% p.a. (for $0 to $250,000)
4.75% p.a.(for $0 to $1,000,000)
Yes up to $250,000
Bonus variable rate is available for the first 4 months.
Competitive introductory variable rate for first 4 months (on deposits up to $250,000). No account keeping fees to pay. Multiple 2024 Mozo Experts Choice Award winner.
CompareCompareSavings Account
Competitive introductory variable rate for first 4 months (on deposits up to $250,000). No account keeping fees to pay. Multiple 2024 Mozo Experts Choice Award winner.
- Maximum rate
- 5.35% p.a. (for $0 to $250,000)
- standard interest rate
- 4.75% p.a.(for $0 to $1,000,000)
- Govt Deposit Guarantee
- Yes up to $250,000
- account fee per month
- $0.00
- Maximum rate conditions
- Bonus variable rate is available for the first 4 months.
- Access
- BPay, Branch access, Phone banking, Internet banking
- Minimum balance
- $0.00
- Other restrictions
- Must have a Macquarie Transaction Account to link with.
Read our Mozo Review to learn more about the Savings Account
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Mozo experts choice awards won:
- Kick Start Savings - 2024
High Interest Savings Account
5.75% p.a. (for $0 to $250,001)
4.40% p.a.(for $0 to $250,001)
Yes up to $250,000
Bonus rate for the first 4 months from account opening
Reward yourself with a higher rate for your good savings habits with the Rabobank High Interest Savings Account. No Account keeping fees. No minimum balance. Support Aussie farmers with every dollar you save.
CompareCompareHigh Interest Savings Account
Reward yourself with a higher rate for your good savings habits with the Rabobank High Interest Savings Account. No Account keeping fees. No minimum balance. Support Aussie farmers with every dollar you save.
- Maximum rate
- 5.75% p.a. (for $0 to $250,001)
- standard interest rate
- 4.40% p.a.(for $0 to $250,001)
- Govt Deposit Guarantee
- Yes up to $250,000
- account fee per month
- $0.00
- Maximum rate conditions
- Bonus rate for the first 4 months from account opening, reverting to standard variable rate. Rate shown is for Personal customers and is subject to change. Different rates apply to Business/SMSF customers.
- Access
- Internet banking
- Minimum balance
- $0.00
- Other restrictions
- Must link to a transaction account
Read our Mozo Review to learn more about the High Interest Savings Account
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Bonus Saver Account
5.00% p.a. (for $0 to $250,000)
0.05% p.a.(for $0 and over)
Yes up to $250,000
Bonus rate when at least $20 is deposited each month and five Visa Debit transactions are made each month using linked Glide transaction account.
Start saving and earn interest with just a $20 deposit and make 5 eligible transactions each month. No fees or penalties for withdrawing money.
CompareCompareBonus Saver Account
Start saving and earn interest with just a $20 deposit and make 5 eligible transactions each month. No fees or penalties for withdrawing money.
- Maximum rate
- 5.00% p.a. (for $0 to $250,000)
- standard interest rate
- 0.05% p.a.(for $0 and over)
- Govt Deposit Guarantee
- Yes up to $250,000
- account fee per month
- $0.00
- Maximum rate conditions
- Bonus rate when at least $20 is deposited each month and five Visa Debit transactions are made each month using linked Glide transaction account.
- Access
- Phone banking, Internet banking
- Minimum balance
- $0.00
- Other restrictions
- Must link to a transaction account
Read our Mozo Review to learn more about the Bonus Saver Account
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