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First inflation rise in four months

First inflation rise in four months

Category: Economy

Updated: 14/08/2012
First Published: 14/08/2012

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Consumer Prices Index (CPI) inflation rose from 2.4% to 2.6% in July, the first increase since March 2012 when the measure stood at 3.5%.

The Office for National Statistics revealed that last month the Retail Prices Index also increased, from 2.8% to 3.2%.

Factors that influenced the CPI increase included rising transport costs, particularly air fares, and increases to prices of clothing and footwear.

This means that to beat inflation a basic rate taxpayer at 20% needs to find a savings account paying 3.25% per annum, while a higher rate taxpayer at 40% will need to find an account paying 4.3%.

Currently, basic rate taxpayers can choose between 227 standard savings accounts and ISAs that negate the effects of tax and inflation, while higher rate taxpayers have a choice of just one account.

"Today we are in the ludicrous situation where there are more savings accounts that don't beat inflation than do," said Sylvia Waycot, spokesperson for Moneyfacts.co.uk.

"Today there are 1,092 savings accounts on the market, but only 227 (3 notice, 96 fixed and 128 ISAs) accounts that negate the effects of tax and inflation. There are no no-notice accounts on the market that beat inflation.

"It is important that when savers spot an account they fancy, that they don't hang around. The choice of savings accounts has shrunk over the last month by 30, which shows that the good accounts disappear like magic."

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