Respite for savers as hundreds of accounts now beat inflation
The Consumer Prices Index (CPI) measure of inflation fell from 1% in July to 0.2% in August – the lowest rate for five years, according to the Office for National Statistics.
As inflation has an eroding effect on cash, reducing holders’ spending power, the lower level is good news for savers.
In fact, data from Moneyfacts reveals that the number of deals able to outpace inflation has risen from 91 at last month’s announcement (1%), to more than 680 standard savings accounts today that can either beat or match the figure (based on a £10,000 deposit).
This is three times as many than found in September 2019 when August’s inflation stood at 1.7% and a huge increase from just two fixed rate bonds which could outpace August 2018 inflation of 2.7%.
‘Speed is crucial’
Rachel Springall, finance expert at Moneyfacts, said there are many accounts that can beat inflation today, but with the figure expected to climb to 1.8% in Q3 2021, not one standard savings account can beat this rate.
Springall said: “Over the past month there has been some competition within the savings market, primarily on short-term fixed bonds, ideal for savers who are comfortable to lock their cash away over a year or so for a guaranteed return.
“However, there has been less activity in the easy access accounts market except for a notable rate rise by Skipton Building Society which now leads the market at 1.20%. It is these types of accounts that savers may be turning to right now to ensure they can access their money quickly.
“There remains to be a notable difference between the top fixed rate bonds and fixed ISA rates so savers will need to consider their options while taking into consideration the Personal Savings Allowance. Savers who are now coming off a fixed rate deal will also need to prepare themselves for a fall in interest when choosing a similar product today.”
She added that “speed is crucial” when it comes to applying for the top savings rates in the market as if you wait too long, the deal could be cut or pulled from the market entirely.
“It is safe to say that savers will be in a race against one another to secure the best returns in the months to come as the savings market remains very fluid,” she said.