The Consumer Price Index (CPI) increased to 0.7% in January 2021, up from 0.6% the previous month, mainly due to higher food prices and household goods, it was revealed today.
This announcement will come as a disappointment to savers as it means that there are now 122 savings accounts that can match or beat inflation*. Of these, there are two easy access accounts, two notice accounts, two variable rate cash ISAs, 24 fixed rate ISAs and 92 fixed rate bonds.
In addition to this, there is the possibility that inflation will continue to rise this year, which could see savings deposited into long-term fixed savings accounts erode over time, especially if the Bank of England’s target inflation rate of 2% is met. Rachel Springall, finance expert at Moneyfacts.co.uk, added: “Inflation is predicted to climb to 2.1% during Q1 2022, and right now not one standard savings account could beat this, nor the Government’s target of 2%. The top rate deal on the market today stands at 1.50% on a five-year fixed rate bond as an expected profit rate from Gatehouse Bank. In real terms, savers’ cash would depreciate based on those levels.”
As such, savers concerned about the long-term impact of inflation on their savings may want to consider their options carefully before depositing funds into a long-term savings account.
