Inflation falls to 3.4% - Economy - News - Moneyfacts

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Inflation falls to 3.4%

Inflation falls to 3.4%

Category: Economy

Updated: 20/03/2012
First Published: 20/03/2012

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 It is now over 6 months old so the content may be out of date.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 figures released today show that the Consumer Prices Index (CPI) fell during February, from 3.6% to 3.4%.

It is the lowest measure of CPI inflation since the 12 months to November 2010, and the number of savings accounts available that beat inflation has increased.

To beat inflation, a basic rate taxpayer at 20% needs to find a savings account paying 4.25% per annum, while a higher rate taxpayer at 40% needs to find an account paying at least 5.66%.

Today there is a choice of 79 standard savings accounts that taxpayers can choose from to negate the effects of tax and inflation.

The effect of inflation on savings means that £10,000 invested five years' ago, allowing for average interest and tax at 20%, would have the spending power of just £9,198 today.

The CPI rate of inflation has fallen consistently in recent months, but Sylvia Waycot, spokesperson for Moneyfacts.co.uk, says that challenges still remain for savers.

"It's just a bit too early for everyone to burst into a chorus of 'don't worry, be happy' as today's figures still mean that there are only 79 accounts out of 1,126 that negate both inflation and the taxman's cut," she said.

"Today's accounts favour short-term bonuses which mask the lower rate that is applied on first anniversaries.

"Savers need to keep on top of their savings by reviewing the market annually."

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