Low inflation is savers’ saviour

Savers have been given another boost after it was revealed inflation in the UK remained steady in July.

According to the Office for National Statistics, the Consumer Prices Index (CPI) measure of inflation was unchanged on the previous month at 1.8%.

Meanwhile, the Retail Prices Index (RPI), a measure which includes costs related to housing such as mortgage payments, witnessed a small rise but remained negative at -1.4%.

The figures are good news for savers as even though interest rates on savings account remain at historic lows, the real return achieved remains high.

If the price of goods and services in the economy falls, then consumer's spending power increases.

Moneyfacts.co.uk recently revealed that as a result of a fall in the cost of living, the real rate of return for savers was actually at its highest level for 18 years.

"Banks and building societies appear to be redeeming themselves on the savings front, with a variety of deals offering decent returns," said Louise Holmes, analyst at Moneyfacts.co.uk.

"Savers, who have suffered as of late with poor rates, may be wise to take advantage of the current situation."