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Inflation falls to 2.2%

Inflation falls to 2.2%

Category: Economy

Updated: 16/10/2012
First Published: 16/10/2012

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 It is now over 6 months old so the content may be out of date.

Inflation fell to 2.2% in September, its lowest level in nearly three years, official statistics show.

Figures from the Office for National Statistics revealed that the Consumer Prices Index dropped from 2.5% to 2.2% last month, nearing the Government's 2% target.

This was the lowest rate since November 2009, when the measure fell to 1.9%.

The Retail Prices Index, which includes mortgage payments, dropped from 2.9% to 2.6% last month.

Research by Moneyfacts.co.uk has revealed that a basic rate taxpayer would need to find a savings account paying 2.75% to beat the effects of inflation, an improvement on last month's figure of 3.12%. Higher rate taxpayers would need to find a rate of 3.66%.

There is a choice of 266 standard savings accounts and ISAs that basic rate taxpayers can choose from to negate the impact of tax and inflation and 150 for higher rate taxpayers.

"Although today's fall in inflation is welcomed, it's hardly cause to celebrate. The small rise in spending power will not suddenly make the nation's savings accounts profitable for the majority of savers," said Sylvia Waycot, spokesperson for Moneyfacts.co.uk.

"Savers need to be vigilant and take advantage of tax breaks such as ISAs and if they can, lock their money away for a fixed period to ensure better rates."

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