Inflation increased to 2.9% in June, according to figures release by the Office for National Statistics (ONS) today.
The ONS reported that Consumer Prices Index (CPI) inflation reached a 14-month high last month, rising from 2.7% to 2.9% due to higher fuel and clothing prices.
The rise is a further blow to the UK's hard-hit savers.
Research by moneyfacts.co.uk reveals that a basic rate taxpayer at 20% will need to find a savings account paying 3.63% per annum to negate the effects of tax and inflation. Currently, however, there is not a single savings account that will earn savers the return they need.
In contrast, one year ago there were 156 ISAs and 122 non-ISAs that beat tax and inflation.
"It was once unthinkable that a savings account would merely provide a safe haven for your money rather than a place to watch it grow. Sadly, that is today's reality," said Moneyfacts.co.uk Editor Sylvia Waycot.
"Watching the spending power of savings diminish, especially if it is needed to supplement income, is today causing heartbreak for many and could lead to escalating risk in the search for a return."
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