Inflation rate falls to 0.2% | moneyfacts.co.uk

Derin Clark

Derin Clark

Online Reporter
Published: 16/09/2020

The latest Consumer Price Index (CPI) figures show that during August inflation fell to a five-year low of 0.2%, which will be welcome news to many savers especially as savings rates are starting to rise.

August’s fall in inflation came after July saw inflation rise to 1.0%, which has resulted in a 0.8% fall between July and August. As a result of this fall 661 savings accounts can now beat inflation, an increase from the 91 accounts that could beat July’s inflation rate of 1.0%.
Of the accounts that can beat August’s inflation rate of 0.2%, 80 are easy access accounts, 72 are notice accounts, 77 are variable rate ISAs, 131 are fixed rate ISAs, and 301 are fixed rate bonds.

Although savers will be pleased at the significant increase in number of savings accounts that can now beat inflation, those considering a long-term fixed account should keep in mind that the predicted rate of inflation for July to September 2023 is 2.2% and there are no accounts that currently beat this rate.

Saving rates rising

There was further good news for savers this week as some providers have been increasing rates, resulting in new top paying easy access and one year fixed rate bond accounts in the charts. Yesterday, Skipton Building Society increased the rate on its easy access account, resulting in its Online Bonus Saver Issue 7 paying a chart-topping rate of 1.20%, which includes a 0.50% bonus for 12 months and can be opened with a minimum deposit of just £1.

Competition within the one year fixed rate bond chart has also been increasing and there are now four accounts that pay the top one-year rate of 1.20%. Aldermore pays 1.20% on its 1 Year Fixed Rate Account, which requires a £1,000 minimum deposit to open. There is also a version of this account that pays interest monthly at a slightly lower gross rate. Bank of London and The Middle East pays an expected profit rate of 1.20% on its Premier Deposit Account, which requires a £1,000 minimum deposit to open. Paragon Bank pays 1.20% on its 1 Year Fixed Rate Savings Account, which also requires a minimum deposit of £1,000 to open and offers a version that pays interest monthly at a slightly lower gross rate. United Trust Bank pays 1.20% on its UTB 1 Year Bond, which requires a £5,000 minimum deposit to open.

Although some saving rates are increasing, savers looking to get the best rate should act quickly as Rachel Springall, finance expert at Moneyfacts.co.uk, explained: “Speed is crucial when it comes to applying for the top savings rates in the market and if consumers wait too long, then they could see the deal cut or be pulled from the market entirely. It is safe to say that savers will be in a race against one another to secure the best returns in the months to come as the savings market remains very fluid.”

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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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