The latest official inflation figures, released this morning, show that the Consumer Prices Index (CPI) rose to 1.3% in October. An increase of 0.1% from the five-year low of 1.2% recorded in September, it's still well below the Bank of England's inflation target of 2.00% and marks the 11th consecutive month of remaining at or below this level.
It means there are now 267 savings accounts that will beat inflation, and although this is a drop of 55 from last month when 322 could do the same, it can't be denied that it's a pretty impressive tally – after all, you only need one…
In order to counter the effects of tax and inflation, a basic rate taxpayer will need an account that pays 1.63% per annum (or 2.17% for a higher-rate taxpayer) to secure measurable returns. In other words, find an account that pays above this level and you won't see the value of your money eroded, giving you real returns that can help your balance grow.
The 267-account total is spread fairly evenly across the ISA and non-ISA market, with 137 non-ISA accounts (135 fixed bonds and two notice accounts) and 130 cash ISAs offering the necessary rates. This is an improvement of 222 accounts on this time last year, when inflation stood at 2.2% and a basic rate taxpayer would need an account paying 2.75% to counter its effects – something that only 45 could do.
There's now plenty of choice for savers looking to preserve the value of their savings, but with the way the market is at the moment, not everyone will be shouting from the rooftops. Average rates still aren't setting the world on fire – and in many cases they're still falling – so securing a decent return will still be difficult.
Sylvia Waycot, editor of Moneyfacts.co.uk, commented: "Inflation may have risen after three consecutive months of falls, but it still makes little difference to savers suffering from poor returns. There is an abundance of ISAs that beat inflation, over half all cash ISAs in fact, but it's the lack of decent returns that's the big problem for savers, not choice.
"Today there are a total of 828 savings accounts on the market, but only 267 pay enough interest to negate the effects of tax and inflation. This time last year there were only 45 accounts to choose from, but despite the lack of choice, these savings deals paid better interest, so savers are in a worse situation today."
The market appears to have come to a standstill, with providers simply not giving savers the rates they want – or need. The key reason is that they just don't need our cash, with many having surplus funds left from the Funding for Lending Scheme, so they don't need our deposits to balance the books.
Until this changes, there's no indication that the market will improve, but there are still some slight glimmers of hope. Retirees could be looking forward to the new accounts set to be launched by NS&1, and of course, there are still plenty of accounts that can offer inflation-beating returns – if you know where to look.
"With the New Year fast approaching, savers are daring to hope because the much anticipated Pensioner Bonds launch in January, offering up to 4% interest," added Ms Waycot. "However, those looking to supplement their income will be disappointed as these won't pay monthly interest, but there are alternatives – the average fixed return on standard monthly interest accounts is currently an inflation-beating 1.83%.
"What savers really want for Christmas is someone to shake up the market, so that providers start offering decent returns on their savings." That really would be a merry Christmas for all concerned, but in the meantime you've still got 267 accounts to choose from that can at least beat inflation. Check out our best buys to get started.
Compare some of the best savings rates
Best cash ISA rates
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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