Savers were dealt another blow today as figures show that the Consumer Prices Index (CPI) rose from 4.5% to 5.2% during September.
It means that to beat inflation, a basic rate taxpayer at 20% needs to find a savings account paying 6.50% or more, while higher rate taxpayers (40%) require a product paying at least 8.67%.
Taxpayers have a choice of just five inflation-tracking accounts whilst there are no regular accounts that beat inflation in today's market.
The effect of inflation on savings means that £10,000 invested five years ago, allowing for average interest and tax at 20%, would have the spending power of just £9,309 today.
Sylvia Waycot, spokesperson for Moneyfacts.co.uk, said that today's figures represented a blow to people relying on savings interest to help pay their rising food and fuel bills.
"The rate of inflation means hundreds of thousands of savers need accounts paying an unattainable 6.5% before they earn a real rate of return on their money," she added.
"Anything less means they will fall into 'the eroding spending power trap' which has already wiped almost £700 off the spending power of £10,000 in just five years."
In just a year the number of savings accounts that beat inflation for consumers paying 20% tax has fallen from 31 to five, two of which are structured products that may not appeal to savers who are adverse to risk.
But the current rate of inflation will actually benefit a number of people, as the annual rise in a number of benefits is set by the September CPI figure.
They include the state pension, Jobseeker's Allowance, Child Benefit and Incapacity Benefit, with the 5.2% rise to be introduced in April next year.
In addition, the new ISA limits are based on September's inflation figures. Therefore from April 2012 savers will be able to invest £11,280, of which £5,640 can be placed in a Cash Isa.
Find the best savings rates for you - Compare savings accounts
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 Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.