The Bank of England’s quarterly Monetary Policy Committee (MPC) predicts inflation will rise to 2 per cent by the end of 2021 and 2.1 per cent by the end of 2022.

The committee’s quarterly Monetary Policy Report has a new format and leads with projections, rather than focusing on a backwards-looking analysis.

Low inflation is good for savers – it means their money is less likely to lose money in real terms – while rising inflation makes it trickier to find a savings account which beats inflation.

According to Hargreaves Lansdown, with inflation at 1.5 per cent, more than 200 savings accounts beat inflation – including 30-day notice accounts and those fixed for as little as six months. But if you fix until the end of 2022, when rates are predicted to hit 2.1 per cent, fewer than 10 fixed rate bonds currently on the market will stay ahead of inflation.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “Falling inflation has been a shot in the arm for savers, who haven’t needed particularly stellar returns to stop the value of their savings being eroded by inflation. It’ll be music to their ears that the Bank of England thinks inflation is set to keep falling – and only turn up again in the second half of next year.”

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However, savers shouldn’t get lulled into a false sense of security, because there are two potential flies in the ointment.

Firstly the Bank of England has built certain assumptions into its predictions – assuming an orderly Brexit, subdued economic growth and weaker wage rises. If there are any surprises, these predictions may never come to fruition.

The other issue is that when inflation starts rising, the Bank of England expects it to continue to do so through to the end of 2022 – at which point it will be around 2.1 per cent. If you fix your savings until after this point, currently fewer than 10 fixed rate accounts beat 2.1 per cent.

“It means it’s vital to shop around for each portion of our savings to beat inflation. You can earn up to 2.36 per cent in an account fixed over five years and 2.32 per cent in one that’s fixed over three years, which is ahead of predictions,” added Coles, “If you’re putting the money aside for five to 10 years or more it’s worth considering investments. These will rise and fall in value over the short term, but over the long term they have the opportunity to take advantage of growth and income from the stockmarket.”