Inflation falls back to 2%, but no relief for savers
The CPI including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 1.9 per cent in May 2019, down from 2 per cent in April 2019.
This means wages are continuing to grow faster than prices, as average earnings grew by 3.4 per cent in the past year.
The ONS said: “Falling fares for transport services, particularly air fares influenced by the timing of Easter in April, and falling car prices produced the largest downward contributions to the change in the rate between April and May 2019. Partially offsetting upward contributions came from rising prices for a range of games, toys and hobbies, furniture and furnishings, and accommodation services.”
According to Hargreaves Lansdown, just 105 savings accounts beat inflation. One in five of these are regular saver accounts, fixed for a year, with restricted monthly deposits.
Excluding regular savers, only one account from branches of the biggest high street banks matches inflation at 2 per cent; this is a five-year ISA from Halifax.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said: “The fact that inflation dropped in May, and accounts aren’t racing ahead of it, means savers can’t beat inflation by crossing their fingers and hoping for inflation to fall.
“Neither can they sit and wait for the Bank of England to raise rates, or for the high street banks to run out of cheap cash and start offering decent rates again. Because more than 18 months after the Bank of England started raising rates in November 2017, the high street giants are offering just 0.25 per cent on easy access accounts.
“The only way to beat inflation is to get active with your savings and find the best possible rates right now. You can’t beat inflation in an easy access account, but you can get up to 1.5 per cent on your rainy day fund, and then tie up the rest for inflation-busting rates over the periods that suit you best. Today, you can earn up to 2.75 per cent by fixing for five years, 2.55 per cent by fixing for three, 2.42 per cent by fixing for two years, and 2.2 per cent by fixing for a year.”