The latest official inflation figures show that the Consumer Prices Index (CPI) fell to 0.0% in June, down from the rate of 0.1% in May. It's the 19th consecutive month of being at or below the Bank of England's 2.00% target and has been hovering around the zero-mark since February, and even turned negative in April for the first time on record.
The run of low inflation is expected to continue in the short term, but this is great news for consumers. Not only is the cost of living not rising too much – a rate of 0% means that average prices remain unchanged from this point last year – but wage growth is showing signs of improvement, which means consumer spending power is on the up.
Better yet, ALL savings accounts on the market are able to beat inflation! Moneyfacts' figures show that 888 savings accounts are currently available, and of these, 696 (143 no notice, 77 notice, 261 fixed rate bonds and 215 cash ISAs) are restriction-free and open to everyone.
"Despite savers still feeling the pinch, the market is slowly starting to see the green shoots of recovery, and the current low level of inflation means that savers now have more choice than ever," said Charlotte Nelson, finance expert at Moneyfacts.co.uk.
"Today, savers have the choice of 696 products that beat inflation, but a year ago there were only 72 products to choose from. Savers on the hunt for decent returns two years ago were even worse off, as absolutely no savings accounts offered a reprieve from high inflation." This just shows how far we've come, and that's before we even get to the rising level of competition…
As Ms. Nelson points out, challenger banks are coming into the market and are taking the charts by storm, and it's having a positive effect on savings rates: "Now that there are more challenger banks competing to be market-leaders in savings, rates on accounts are showing signs of life. Two years ago the best fixed rate bond paid just 2.90% for those willing to fix for five years, but today, the top five-year fixed deal pays 3.53% - a massive 0.63% more.
"Savers need to refocus their attention on these new banks as traditional providers still don't want or need investors' funds. A staggering 139 savings accounts on the market pay 0.5% or less, but why opt for this when there are so many more lucrative deals on offer? Savers need to shop around to chase down decent accounts and act fast when they find them."
The message is clear – don't put up with paltry savings rates! The rising level of competition means that there are plenty of high-paying options out there for those who take the time to look, and if you head towards challenger banks, you could well be better off.
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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