Inflation eases slightly, but what does it mean for savings?

Falling petrol prices see inflation drop back but increases in alcohol prices in pubs and restaurants mean the cost of living remains stubbornly high.

UK inflation dropped to 10.7% in November, down from the 41-year high of 11.1% recorded in October of this year.

Data from the Office for National Statistics (ONS) shows the main driver behind the easing in the inflation rate was the slowing of petrol and diesel prices, but this was largely offset by rising costs in restaurants, cafes and pubs at a time when many people will be planning nights out over the Christmas period.

The drop in the Consumer Price Index (CPI) was slightly bigger than expected, and experts believe the peak in inflation may have been reached in October. But with energy and food prices remaining high, households across the UK will continue to face pressure.

If you’re looking to grab a top savings rate, you may need to act quickly as some of the best returns on short-term fixed rate bonds have fallen in recent weeks. Table-topping brands have cut the rates on offer, leading to further cuts from other brands. Unlike the period of healthy rate rises just a couple of months ago, providers have slowed this pace, with some withdrawing deals in the space of a few days.

Inflation continues to take its toll on savers’ cash, and not one standard savings account can beat the rate of 10.7%. But don’t be put off from comparing and switching deals if you can, as you could be missing out on a better rate of return. Easy access accounts remain a firm favourite for now, but disappointingly many of the biggest high street banks are paying very little to loyal customers. However, challenger banks and building societies are offering some of the best rates out there, so it’s always worth considering the more unfamiliar brands.

One area of the savings market to see an increase to rates and competition is notice accounts, which could be a great choice if you don’t want to tie your cash up in a fixed rate bond or ISA. It’s also worth keeping a close eye on our weekly savings and ISA roundups where we highlight the best rates available across the market. As we come towards the end of another year it may be an ideal time to take stock of any older accounts and look to move them to take advantage of the latest deals.