Rise in prices outstripping savings rates

SAVERS have been dealt another blow with inflation now rising at 2.9 pc a year. There is no savings account on offer which comes near to matching this increase.

The 2.9 pc rise as measured by the Consumer Prices Index is the highest since June 2013 and up from 0.3 pc a year ago.

It negates any increases in fixed rate bonds, cutting the spending power of each £10,000 to £9,710 over a year — a £290 drop. Even after adding in the 1.7 pc interest savers can earn with the top one-year fixed rate bond from Atom Bank, the value drops by 1.2 pc to £9,880.

With the top easy-access account from Charter Savings Bank at 1.11 pc, savings will devalue by 1.79 pc a year to £982.10.

Cash Isas will also suffer. The top one-year fixed rate is 1.16 pc from Charter Savings Bank, on sale from noon today. It also has the best easy-access rate at 1.05 pc along with Virgin Money. The value of your cash will drop 1.75 pc and 1.85 pc respectively a year.

The National Savings Index-Linked Certificates do beat inflation. They pay the rate as measured by the higher Retail Prices Index, currently 3.7 pc, plus a wafer-thin 0.01 pc for two, three or five years.

But they are only open to those who already hold them and are coming to the end of their term.