Today it was announced that the Consumer Price Index (CPI) fell to a four-year low of 0.8% during April, but while this is initially good news for savers, continuing rate cuts means that savers could struggle to beat even low inflation in the months to come.
With inflation at 0.8%, there are currently 28 easy access accounts, 49 notice accounts, 28 variable rate ISAs, 80 fixed rate ISAs and 220 fixed rate bonds that can match or beat inflation. Of these, 24 easy access accounts, 49 notice accounts, 24 variable rate ISAs, 70 fixed rate ISAs and 209 fixed rate bonds are able to pay more than 0.8%.
While savers have the choice of 376 accounts that can beat the current inflation rate, if inflation meets the Government’s target of 2%, as the savings charts stand today, not even a five year bond would be able to beat the target inflation rate. In addition to this, with savings rates continuing to fall, there is a likelihood that if inflation rises even slightly, savers could struggle to beat inflation.
Savings market analysis
|Top savings deals at £10,000 gross||23-May-18||22-May-19||22-Apr-20||Today|
|Easy access account||Bank of Cyprus UK – 1.32%**||Virgin Money – 1.50%||RCI Bank UK – 1.20%||National Savings & Investments – 1.15%|
|Notice account||Paragon Bank – 1.66% (120-day)||Hampshire Trust Bank – 1.91% (90-day)||ICICI Bank UK – 1.59% (95-day)||ICICI Bank UK – 1.59% (95-day)|
|One-year fixed rate bond||Gatehouse Bank – 2.00%***||BLME – 2.20%***||BLME – 1.60%***||Gatehouse Bank – 1.50%***|
|Two-year fixed rate bond||Secure Trust Bank – 2.16%||Al Rayan Bank – 2.40%***||BLME – 1.75%***||QIB (UK) – 1.65%***|
|Three-year fixed rate bond||RCI Bank UK – 2.31%||Gatehouse Bank – 2.55%***||Vanquis Bank – 1.80%||Gatehouse Bank – 1.75%***|
|Four-year fixed rate bond||Vanquis Bank – 2.52%||BLME – 2.50%***||RCI Bank UK – 1.80%||BLME – 1.70%***|
|Five-year fixed rate bond||United Bank UK – 2.79%||Gatehouse Bank – 2.75%***||RCI Bank UK – 1.90%||Gatehouse Bank – 1.85%***|
**Rebranded to Cynergy Bank. ***Islamic bank, pays an expected profit rate. Inflation announcement dates
Commenting on what today’s inflation announcement means for savers, Rachel Springall, finance expert at Moneyfacts.co.uk, said: “On the face of it, inflation remaining below the Government’s target 2% may seem as though savers have been given a lifeline to beat its eroding effects, but that optimism may not remain over the longer-term. Inflation dropping to a four-year low is good news to savers, for now at least, but savings rates are still being cut across the market.
“This time a year ago, inflation was above the Government’s target, but interest rates were much higher than they are currently, so over 100 deals could beat 2.1%. In fact, savers could beat the Government target of 2% with a one-year bond, whereas today, not even locking money away for five years will do the same. Indeed, the top five-year bond today pays 1.85% from Gatehouse Bank as an expected profit rate, but a year ago, savers could earn 2.20% on a one-year bond with Bank of London and The Middle East (BLME). Inflation is predicted to be 2.0% in Q2 2023, but right now that rate could not be beaten with any standard savings account.
“There has been a significant number of savings account options vanishing from sight since the start of March too, so savers will have fewer deals to choose from. Savers may also find that there is little difference in the returns offered in the top rate tables. Indeed, many of the top easy access accounts pay around 1%. This movement is typically when top rates even out, usually so that one provider doesn’t sit head and shoulders above its peers to avoid being inundated with deposits.
“So that savers can have the best possible chance to acquire the most lucrative rates, they would be wise to check the top rate tables online regularly and sign up to rate alerts. As it has been a couple of months since the market experienced two base rate cuts, now is a vital time to check any existing rates and switch to something better to not be left feeling disappointed.”
*Data note: Please note that these savings product numbers only include deals that are available to all UK residents (no notice/easy access, notice, fixed rate bonds, variable or fixed ISAs) and excludes regular savers and children’s savers (this figure does not count each interest payment option for each account), based on a £10,000 deposit. Higher rates may be available for larger deposits.
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.