Inflation rises, but no Merry Christmas for savers - Savings - News |

News News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

Inflation rises, but no Merry Christmas for savers

Inflation rises, but no Merry Christmas for savers

Category: Savings

Updated: 15/12/2015
First Published: 15/12/2015

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 It is now over 6 months old so the content may be out of date.

Official figures from the Office for National Statistics have revealed that UK inflation returned to positive territory in November, with the measure of CPI standing at 0.1%. For economists, this is a welcome turnaround from the rate of -0.1% recorded in both September and October, but it won't be such good news for savers – especially as our figures reveal that they're already contending with multiple rate cuts.

Santa – where's my interest?

Our figures show that rate reductions in the savings market are now outweighing rate rises for the first time since daily rate change monitoring began, which means it may not be such a Merry Christmas for many savers: during November, Moneyfacts recorded 36 savings rate rises, with only one deal posting a significant increase of 0.80%. Disappointingly, these rises were eclipsed by the 73 rate reductions that took place over the same period, with some rates falling by a massive 0.86%.

"The savings market is certainly lacking Christmas cheer this year," said Charlotte Nelson, finance expert at Moneyfacts. "The multiple rate increases we've been enjoying recently have now become a thing of the past, with many providers cutting rates to keep themselves out of the Best Buys, as they simply don't need savers' cash. Savers are therefore fighting an uphill battle to get a great savings account, with many of the bigger banks simply turning their backs on savers' money."

Signs of hope

There are some slight glimmers of hope, however, not least in terms of inflation. It may have risen but there's still little to worry about in terms of savings erosion, as even at 0.1%, your funds shouldn't be too affected by inflation. In fact, all of the 879 savings accounts currently on the market can match or beat inflation, and of these, 732 (133 no notice, 72 notice, 313 fixed rate bonds and 207 cash ISAs) are without restrictive criteria and open to everyone.

Then there's the launch of the Help to Buy ISA, which will hopefully bring first-time buyers closer to realising their dreams of homeownership through the support of a Government bonus, with the added perk that interest of up to 4% is being offered by some providers, beating all of their market competitors.

There've been other positive indications recently, too, particularly with the Financial Conduct Authority announcing last week that it was going to focus on boosting competition in the savings market. It's also going to highlight the worst-paying accounts and force providers to prominently display customers' rates on all correspondence, and in doing so, "it's hoped that this will raise savers' awareness and motivate them to switch to more competitive accounts", added Charlotte.

However, the onus is still squarely placed on the saver, who must compare the options and switch accounts to get a better deal. As Charlotte points out, it may be time to look towards the unfamiliar to achieve decent returns: "Challenger banks appear to be the only providers with the appetite for savers' funds, so anyone sitting with an account paying next to nothing shouldn't put up with it. Instead, they should move their money elsewhere and get the returns they deserve."

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.