The Consumer Prices Index (CPI) measure of inflation rose to 1.8% in January – up from 1.3% the previous month. The unexpected jump means the number of savings accounts beating inflation has fallen from 331 to just 21, according to Moneyfacts.

At the same time, rates have been dropping across the board.

Moneyfacts said savers will now have to fix for at least two years to match inflation or three years to outpace it.

Atom Bank pays 1.80% on its two-year fixed rate bond, while FCMB Bank (UK) offers 1.9% on its three-year bond through the Raisin platform.

Sarah Coles, personal finance analyst, Hargreaves Lansdown, said: “Savers have been hit with a double-whammy of falling savings rates and rising inflation. The impact of cuts in savings rates over the past six months has been softened by lower inflation – so now inflation is on the rise, we’re set to feel the pain of the cuts far more acutely.

“It means we need our cash to work as hard as possible if we’re going to stand a chance of beating inflation.”

Falling rates

Figures from Moneyfacts show top easy access and fixed bonds have dropped month-on-month, with the best five-year bond today paying 0.4% less than the top deal last month.

Today, Marcus, the savings arm of Goldman Sachs, announced it was cutting the rate on its market-leading easy access account from 1.35% to 1.3%. The best easy access account open to new customers in August 2019 was 1.5%

Elsewhere, the best one-year fix last summer offered 2.1%, while now it is 1.65% and the best five-year fix back in August was 2.45% and now it is 2.1%.

Coles’ advice for savers is to split their cash across different types of product.

“We should think of our cash savings as a number of slices of cash – depending on what it’s for,” she said.

“We should have an emergency fund of 3-6 months of expenses in a competitive easy access account. After that, we need to think carefully about when we need to access the cash and how long we can fix each slice for in return for more interest.”