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Savings accounts to battle the inflation menace

Savings accounts to battle the inflation menace

Category: Savings

Updated: 14/09/2010
First Published: 14/09/2010

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Savers still have their work cut out to make sure their savings are not eroded by the effects of inflation.

According to the Office for National Statistics, Consumer Prices Index inflation remained unchanged in August at 3.1%, bringing to an end three consecutive months of falls.

Rises in the prices of airfare, clothing and food meant the measure remained well above the Government's 2% target, although Retail Price Index inflation slowed slightly to 4.7%, down from 4.8% in July.

According to Moneyfacts.co.uk, the lack of movement means a basic rate tax payer needs to find a savings account paying 3.88% in order to stop their savings pot effectively eroding away.

Higher rate tax payers still face the nigh on impossible task of locating an account paying 5.17%.

The good news for basic rate tax payers is that 91 savings accounts are available which would have the desired effect.

Amongst the best savings accounts currently paying above the rate required to break at least even are the State Bank of India's Four Year Fixed Rate Bond paying 4.20% and Nationwide's Five Year Fixed Rate e-Bond paying 4.10%.

"Inflation is a stealthy enemy that quietly erodes the spending power of a saver's hard earned nest egg," said Darren Cook, spokesperson for Moneyfacts.co.uk.

"The only trigger for any improvement in savings rates may be a surprise increase in the Bank of England's base rate but this is not likely to happen soon.

"It is difficult for savers to try and beat inflation. At best, they should try to stay within an arms length and try to weather the storm of low rates and high inflation."

Keep tabs on all the latest and best savings accounts with our savings account best buy charts.

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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 Any products featured may be withdrawn by their provider or changed at any time.

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