Will we pay £150 for a loaf in the future?

A century from now, a loaf of bread will cost £150, if the price carries on going up at the same rate as it has done over the last hundred years.

A new report from Lloyds Bank shows that the purchasing power of the pound has fallen by 98.9% since 1914.

In that time, the price of a loaf of bread has shot up by an astonishing 11,171% - back in 1914, it cost less than a penny. A pint of milk costs 66 times more than it did back then, and a pint of beer has become 294 times more expensive. Drinkers paid an average of £2.94 last year, compared with just 1p in 1914.

"Over the past one hundred years the large increase in retail prices has substantially eroded the purchasing power of the pound. In fact, the value of money has fallen, on average, by just under five per cent per year since 1914," says Ashish Misra from the wealth investment office at Lloyds Bank Private Banking.

"An individual today would need close to £90 million to have the same purchasing power as £1 million in 1914."

The increase in prices, and consequent fall in the value of money, hasn't been consistent over the years. Prices doubled during the First World War, but fell in eleven of the years between 1920 and 1940 - so that the value of money actually increased.

Prices went up again during the Second World War, by 50%; and since then, they've have risen every year except 2009.

By far the most inflationary period in the past century was the ten years to 1984 when retail prices grew by 224% - or an average of 12.5% per year.

In 1975 alone, the value of money fell by nearly a quarter, as a combination of sharply rising oil prices and rapidly increasing nominal wages drove inflation.

Of course, nobody knows what the future will bring - indeed, yesterday, Bank of England governor Mark Carney announced that inflation could turn negative this year. But the Lloyds researchers say that if retail prices carry on rising at the current annual rate of retail price inflation, 2.8%, the value of money will decline by 94% over the next 100 years.

If this happens, you'll need £1,582 in 2114 to have the same spending power as with £100 today - quite a lot to have to stuff in your pockets.

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