Legal & General’s latest MoneyMood survey has shown a large rise this year in the number of people who expect inflation to reduce the value of their savings and are likely to receive lower than inflation pay rises compared to last year.

59% of adults surveyed said they expected their earnings would fall behind inflation over the next 12 months, compared to 38% at the same time last year.

However, the biggest change is in the number of households who say they expect their savings to fall behind inflation over the next 12 months. 78% of households say they expect their savings will grow by less than inflation compared to only 29% last year.

Mark Gregory, Legal & General chief executive savings, said: “For many households the latest ONS report saying inflation remains stubbornly high will be no surprise.

“The big change is that many more households have come to realise that they have to deal with high inflation combined with low interest rates, largely as a result of the Bank of England policy on QE.

“While low interest rates are good for borrowers, when inflation remains high that does come at a price for savers.

“It is worth remembering that wage growth has been well below inflation (according to the ONS) for most of the last four years.

“Our latest figures show 6 out of 10 households expect their income to fall in real terms over the next 12 months as well. Savers are also increasingly aware that the combination of low interest rates and high inflation reduces the value of their savings and hits income for those who depend on their savings to provide extra cash.

“Since the Bank of England started cutting the base rate the “typical” savings rate has plummeted. Our MoneyMood research shows 8 out of 10 households expect the value of their savings to fall again over the next 12 months.

“People will either have to save more or look to save in different ways, or both to combat inflation.”