Falling inflation brings hope for savers

Savers across the UK have been boosted by a further drop in inflation, which according to the Office for National Statistics fell from 4.2 per cent in December to 3.6 per cent in January.
Financial comparison site Moneyfacts.co.uk said the second consecutive monthly fall in the UK Consumer Prices Index (CPI) – the standard measure of inflation – signals a change in fortunes for savers, who have recently struggled to find savings accounts paying enough to match CPI and prevent their savings pot diminishing.
According to the site, there are currently 47 standard savings accounts available that pay the 4.5per cent per annum required for basic rate taxpayers. While this is considerably higher than the eight which were on offer last month, it is still only a fraction of the overall savings account market.
Moneyfacts spokesperson Sylvia Waycot said: “Today’s accounts favour introductory offers which mask the lower rate that is applied on first anniversaries. This means savers need to change their habits from mild interest to a state of ready alertness to changes in the savings account market.”
She added: “Today’s rate of inflation means hundreds of thousands of savers need an account paying a hefty 4.50pc before they earn a real rate of return on their savings and yet the average no notice savings account only pays a miserly 0.92pc which shows the size of the problem.”
“The number of savings accounts that beat inflation has risen from a miserly eight last month to a much more respectable 47 today, many of which are fixed rate ISAs.”
“However, this is a small blessing when compared to the total number of standard savings accounts available which is 1,100.”