Inflation turns negative – and savers rejoice! - 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 turns negative – and savers rejoice!

Inflation turns negative – and savers rejoice!

Category: Savings

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 It is now over 6 months old so the content may be out of date.

The latest inflation figures show that, in April, the Consumer Prices Index (CPI) turned negative for the first time since official records began in 1996, to stand at -0.1%. Based on comparable historic estimates, it's also the first time that the UK has fallen into deflation since the 60s, and follows two months of remaining at 0%.

It came as little surprise to economists and marks the 17th consecutive month of inflation remaining at or below the Bank of England's 2.00% target, and in real terms, it means that the cost of living is now less than it was a year ago. Quite simply, your money will go further today than it did this time last year, and from a consumer perspective, that's certainly something to be celebrated.

So, too, is the realisation that all savings accounts on the market will beat inflation for a further month! There are currently 859 for you to choose from, and of these, 666 come without restrictive criteria and are open to everyone (i.e. they're not limited to local residents, those with a linked account or high net worth individuals).

This figure is made up of 149 no notice accounts, 78 notice versions, 231 fixed rate bonds and 208 cash ISAs, so there are plenty of options for those seeking truly inflation-beating returns.

Quite simply, it's easier than ever to secure real returns that won't see the value of your money eroded, and ideally, you'll be starting to feel like you have a bit more money in your pockets. However, there's still no getting away from the fact that achieving a truly impressive return won't be easy, as although the value of your savings will be upheld, the poor rates on offer mean you may not get much back.

Charlotte Nelson, finance expert at Moneyfacts, commented: "While the low inflation rate is still being celebrated by those who can see their cash going further, savers looking to supplement their income are struggling with not only a lack of choice but abysmal savings rates.

"The withdrawal of the NS&I Pensioner Bonds sees the only decent rates removed from the market. We knew they weren't going to be around forever, but there is little else left for savers who are wrestling to get a good deal. Take the best fixed rate deal – today it pays 3.53% for five years, but just five years ago, you could open an easy access account paying 3.00%, leaving you with almost the same rate without the commitment."

The message is clear – make sure to shop around! Moneyfacts' figures show that a staggering 138 savings accounts on the market pay 0.5% or less, but consumers can easily get over twice this amount on a best buy easy access account. It really can pay to do your research, and to be quick, as Ms Nelson adds: "Savers need to shop around to chase down decent accounts and act fast when they find them. Good deals can get oversubscribed really quickly, so it pays to act before the deal is reduced or withdrawn completely."

What next?

Make your money go further - find the top-paying accounts on the market

Check out the top six inflation-beating cash ISAs

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.