Inflation Falls: What Does This Mean For Savers? | moneyfacts.co.uk

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Derin Clark

Derin Clark

Online Reporter
Published: 16/12/2020

With saving rates at historic lows, savers will be relieved to see that the latest Consumer Price Index (CPI) figures show that inflation has fallen to 0.3% during November, meaning that there are inflation-beating rates across all savings charts.

In the savings charts, there are currently 496 products (based on a £10,000 deposit) that can beat the inflation rate of 0.3%, and of these, 260 are fixed rate bonds, 118 fixed rate ISAs, 40 variable rate ISAs, 40 notice accounts, and 38 easy access accounts. Although hundreds fixed rate bonds and ISAs can beat the current inflation rate, savers thinking about locking into a long-term account should be mindful that the predicted rate of inflation for the last three months of 2021 is 2.1% and no standard savings account can currently beat this rate.

Commenting on what today’s inflation announcement means for savers, Rachel Springall, finance expert at Moneyfacts.co.uk, said: “Market-leading longer-term fixed rate bonds or ISAs have been choices for savers over many years to beat the Government’s inflation target of 2%, but interest rates have been falling at such a pace that now the top five-year fixed bond pays almost half that of the top deal seen a year ago. Indeed, in December 2019 the top five-year fixed bond paid 2.50% gross on maturity from UBL UK, but the top rate today pays 1.28% gross on maturity from the same provider.

“Those savers coming off a one-year fixed rate bond will be disappointed by the current returns on offer today, as a year ago the top rate of 1.80% gross as an expected profit rate from Bank of London and The Middle East (BLME) can not be found on any fixed rate bond across any term, and today, the top one-year bond pays 0.80% gross from Tandem Bank.

“There will be savers who have accumulated some disposable income this year and if they have not reviewed their savings account, now is the time to do so as the market remains unpredictable. A good deal does not last for long and so it is wise for savers to keep a close eye on the market and act quickly to be in a chance to secure a top rate.”

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