Despite the fall in inflation last December, UK savers are still struggling to find a savings account that offers an inflation-beating rate.
The ONS (Office for National Statistics) recently reported that inflation had seen its largest monthly fall since April 2009, with CPI inflation down from 4.8% to 4.2%. This is largely down to the slower rate which clothing and fuel prices are rising. RPI inflation saw a fall as well last month, dropping from 5.2% to 4.8%.
Unfortunately, the data is still indicating that savers are unable to cultivate much out of their saving efforts, despite the inflation drop. Certainly, a saver who pays the basic rate of tax will need to find an account that offers at least 5.25% per year in order to prevent their savings from eroding.
There are currently only eight accounts on the market that offer such a rate and they are all fixed rate ISA accounts. Regrettably, a higher rate tax payer would need an account which pays an annual rate that is not available on the market at present, at least 7%.
It has been highlighted that UK finance greatly benefits from the money saved by Britons which further compounds the fact that savers are seeing little or no recompense for their efforts.
It is also being pointed out that the few accounts that currently offer a halfway decent rate will probably only offer those rates as part of an introductory deal.
The rate on an average savings account stands at a miserable 0.91%. This means that more and more UK adults are seeing their savings erode instead of grow and the effects are being felt today, as figures show that the spending power of £10,000 has been reduced by £800 in the last five years alone.
One industry expert commented that: "Over the previous 12 months the number of savings accounts that beat inflation for basic rate taxpayers has dropped successively from a not very exciting 22 to only eight, which leaves savers feeling desperate."
