The latest official inflation figures, released this morning, show that the Consumer Prices Index (CPI) fell to 0.0% in February. This is a significant drop from January's rate of 0.3% and is once again the lowest inflation rate ever recorded, meaning it's now been at or below the Bank of England's 2.00% target for the 15th consecutive month.
While a slight dip in the rate of inflation was predicted, such a dramatic drop was not. Economists had largely expected a rate of 0.1% for February, so this larger fall means we're edging even closer to negative territory. Nonetheless, it's great news for savers, as it means ALL ACCOUNTS in the market now pay a rate that will match or beat inflation!
In numerical terms, counting only those accounts that are entirely restriction-free (i.e. not those that are only open to local residents, high net worth individuals, or those with a linked product, etc.), the latest drop means there are 662 savings accounts savers can choose from to beat inflation, including 198 ISAs.
It means it's now easier than ever before to secure an inflation-beating profit that won't see the value of your money eroded, and when the new tax-free personal savings allowance comes into force, you could save even more.
Taking average rates as a guide, Moneyfacts' calculations show that a saver would need to have as much as £151,515 in the typical easy access account, £71,429 in an average one-year bond or £41,494 in an average five-year account before they earn more than £1,000 interest per year and savings tax would kick in. We may have a year to wait until this becomes reality, but it can't be denied that it'll be worth waiting for!
"The fall in inflation is good news for savers," said Sylvia Waycot, editor at Moneyfacts.co.uk. "They will find that the savings interest they are paid will now have more spending power, so they will feel as though it is going further.
"The announcement that savers will not have to pay tax on the first £1,000 of savings interest earned each year is also welcome news; it's about time savers had some, especially after the infamous Funding for Lending Scheme fiasco, which decimated the savings market. To many savers, this new tax freedom is merely righting a wrong that should not have happened in the first place."
So, is it time to take advantage of the new inflation-beating opportunities? Of course, you'll want to find accounts that pay more than the minimum, which is why it's so important to do your research. Tying up your cash in fixed rate bonds will always offer the best returns, but you'll want to make the most of your ISA allowance too, and even high interest current accounts can be a viable savings vehicle for your hard-earned cash. Check out our best buys and see if you can get more from your money!
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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