UK Inflation Falls From 5% to 4.8%, No Christmas Joy for Savers
Personal_Finance / Savings Accounts Dec 13, 2011 - 06:46 AM GMTBy: MoneyFacts
Inflation figures released today show the Consumer Prices Index (CPI) fell during November from 5.0% to 4.8%.
To beat inflation, a basic rate taxpayer at 20% needs to find a savings account paying 6.00% per annum, while a higher rate taxpayer at 40% needs to find an account paying at least 8.00%.
Today there is not a single savings account that taxpayers can choose to negate the effects of tax and inflation whether it is CPI at 4.8% or RPI at 5.2%.
The effect of inflation on savings means that £10,000 invested five years ago, allowing for average interest and tax at 20 per cent, would have the spending power of just £9,210 today.
Sylvia Waycot, spokesperson for Moneyfacts.co.uk, said:
“Savers continue to lose out to inflation even though the rate fell today.
“With returns so low and inflation unsteady, people don’t know which way to turn.
“Today’s rate of inflation means hundreds of thousands of savers need an account paying a staggering 6.00% before they earn a real rate of return on their savings and yet the average no notice savings account only pays a miserly 0.93%.
“This means more and more people are falling into ‘the eroding spending power trap’ which has already wiped nearly £800 off the spending power of £10,000 in just five years.
“Over the last year the number of savings accounts that beat inflation for basic rate taxpayers has dropped successively from 57 to absolutely none, which must leave savers wondering why they save at all.”
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