The latest official inflation figures, released earlier today, show that the Consumer Prices Index (CPI) fell to 1.7% in February – meaning it's the second consecutive month that UK inflation has fallen below the Bank of England's 2% target. And, in even better news, it means savers can now find 116 accounts that will beat it.
In order to counter the effects of tax and inflation, a basic rate taxpayer will need to find an account that pays at least 2.13% per annum – and there are currently 116 inflation-beating accounts available across the ISA and non-ISA market, made up of 37 bonds and 79 cash ISAs.
This is a welcome increase of 34 on last month when there were just 84 accounts that could counter the effects, and a significant improvement on a year ago when just five accounts – all of them cash ISAs – could do the same, thanks to inflation being at 2.8%.
The continued drop in inflation paints a much more positive picture for the nation's savers, although unfortunately rates are still at record low levels – and are still falling. As Sylvia Waycot, editor of Moneyfacts.co.uk, points out, the average ISA pays just 1.65%, a drop of 0.01% on last month and considerably less than a year ago when it was 1.78%.
However, she's urged savers not to turn their back on ISAs altogether, adding: "ISA interest is free from tax and as such each year's allowance should be utilised to the full as you can't reclaim any lost years, and future rates may look very different from our current hard times."
It still pays to make the most of ISAs and of your savings as a whole, and if you're willing to put your money in fixed rate accounts you could well achieve the 2.13% needed to generate a measurable return.
Find an inflation-beating savings account
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