The latest official inflation figures show that the Consumer Prices Index (CPI) rose to 0.1% in May, reversing April's fall into negative territory and marking the highest rate seen since January this year. Significantly, it's also the first time inflation has risen since October 2014 – it increased by 0.2% this month, up from -0.1% in April – and confirms expectations that deflation would only be temporary.
It marks the 18th consecutive month of inflation remaining at or below the Bank of England's 2.00% target, and the slight increase has been welcomed by economists. Consumers can take heart in the fact that the cost of living isn't rising too much, and as an added bonus, savers can still benefit, too – inflation may be rising, but all savings accounts on the market still beat it!
There are currently 872 accounts for you to choose from, and of these, 681 have no restrictive criteria and are open to everyone (they're not limited to high net worth individuals, local residents or those with a linked account, for example). Within that figure there are 145 no notice accounts, 75 notice deals, 248 fixed bonds and 209 cash ISAs, so there are plenty of accounts to choose from that can suit all savings requirements.
Hopefully you're starting to feel as though you've got a bit more money in your pockets, and if you can find the right savings account, that money could go even further. However, the long-term effects of inflation are still being felt – Moneyfacts' calculations show that £10,000 invested five years ago, allowing for average interest and tax at 20%, would have the spending power of just £8,693 today, a drop of 13.07% – and then there's the fact that savings rates are still falling.
Rachel Springall, finance expert at Moneyfacts, points out that the best easy access account on the market currently pays 1.50%, but three years ago you could easily get double that. "Today you would need to fix for five years to get anywhere close," she said. "Worse still, the majority of providers are cutting rates – since the start of June, only eight providers raised rates on their savings deals, compared with 11 who reduced them. This is why it's important to keep on top of the best buy deals out there."
But just how can you do that? Shop around – and check out our best buys! Moneyfacts' figures show that, shockingly, 146 savings accounts on the market pay 0.5% or less, but you could easily get three times this much with the best buy easy access account. Don't be afraid to say farewell to your current provider in order to get a better deal, as "switching is the most effective thing that savers can do to boost their returns in this current environment", added Ms Springall, so "review your current deal regularly to chase down the best offers".
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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