How do you calculate the loss of purchasing power of your savings?
To calculate the loss of purchasing power of your savings, compare your net return with inflation. If your savings earn less than prices rise, your balance may increase while its real value falls. In 2026, with a 1.5% Livret A rate and 2.8% inflation, €10,000 becomes €10,150 on screen, but is worth about €9,874 in real purchasing power.
Good to know :
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Explanation
Your bank shows a balance in current euros: this is the nominal value. But this amount does not tell you what your money can actually buy. To understand the real value of your savings, you need to remove the effect of inflation.
If prices rise faster than your savings grow, you gain euros on your account but lose purchasing power. This is the classic trap with savings accounts: they protect the displayed capital, but they do not always protect the real value of money.
The right approach is to compare your net savings rate with inflation. Regulated French savings accounts such as the Livret A or LEP are tax-free, so their rate is already net. By contrast, a taxable bank savings account should be compared after taxes and social contributions.
Updated on June 2, 2026: savings account rates, inflation and tax rules may change over time. This answer is educational and is not personalized financial advice.
Formula / method
Real value = future amount / (1 + inflation)
Over several years:
Real value = future amount / (1 + inflation)^number of years
Real return = ((1 + net rate) / (1 + inflation)) - 1
Concrete example
Example with €10,000 saved for 1 year on a Livret A at 1.5%, with annual inflation at 2.8%:
- displayed balance after interest: €10,150;
- real value after inflation: about €9,874;
- loss of purchasing power: about €126.
So the bank balance increases by €150, but the real value of the savings falls. This is exactly what the Savings vs inflation tool helps visualize over several years.
Common mistake
The common mistake is looking only at the interest earned. A positive rate does not mean your savings are getting richer in real terms. If inflation is higher than the net return, your money loses purchasing power despite a higher bank balance.
Sources & methodology
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