You are here: Home - Saving-Banking - News -

Nightmare for savers as inflation soars

Written by: Emma Lunn
Savers are losing money in real terms as the surging cost of living means there are no savings accounts that beat inflation.

The ONS announced today that Consumer Price Index (CPI) rose to 5.5% during January, from 5.4% in December.

Although a handful of savings accounts have upped their interest rate since last month, inflation still outpaces the rates on offer. This makes it more important than ever to get the best savings deal to soften inflation’s eroding impact.

Analysis by Moneyfacts found the number of deals able to beat inflation has not changed since last month – there is not one standard savings account that can outpace 5.5%.

The picture for savers is a lot bleaker than this time last year when 100 savings accounts could beat the January 2021 CPI rate of 0.7%, and in February 2020 when 21 accounts could beat the inflation rate of 1.8%.

The best easy access account at the moment is from Cynergy Bank and pays just 0.71%, while the best notice account is from Shawbrook Bank and pays 1.08%. Even five-year bonds are nowhere near the inflation rate – the top account is from UBL UK and pays 2.19%.

Rachel Springall, finance expert at, said: “Despite a slight uplift to some of the top savings rates since last month’s inflation announcement, rising inflation is not allowing any respite. While the Bank of England predicts such a level to be temporary, even the government target of 2% cannot be beaten unless savers lock into a five-year fixed bond.

“There are still savers out there waiting for the December 2021 base rate rise to be passed onto them, let alone the most recent uplift of 0.25% a couple of weeks ago.

Those savers with the patience to wait may wish to reconsider their loyalty, particularly as they will not find a high-street bank featured in the top rate tables.”

Challenger banks and building societies dominate the top of the market both for variable and fixed rate deals, including ISAs. But Moneyfacts warns that those savers who are adamant to use their ISA allowance will find a gap between rates offered on ISAs versus those outside of tax-free wrapper, even taking to account some new market-leaders this month.

Springall added: “If savers are assessing bonds and ISAs, then it’s vital they consider their Personal Savings Allowance foremost.

“Those savers who prefer to have their cash close to hand in an easy access account or easy access ISA may have noticed a few prominent deals surface in recent weeks, but some have already been pulled or cut.

“As we have seen before with challenger banks, the highest rates can get taken up very quickly. Savers would therefore be wise to act quickly or may be left disappointed.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Everything you wanted to know about ISAs…but were afraid to ask

The new tax year is less than a fortnight away and for ISA savers or investors, it’s hugely important. If yo...

Your right to a refund if travel is affected by train strikes

There have been a wave of train strikes in the past six months, and for anyone travelling today Friday 3 Febru...

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week