This week saw inflation continue its downward spiral with CPI falIing to 1.20% for September, down from 1.50% in August, driven mainly by a reduction in energy and food prices. Good news for savers as there are now 416 savings accounts on the market that match or beat inflation for a basic rate tax payer (including ISAs) and 303 accounts for those who pay higher rate tax.
Whereas in the past, savers have had to tie their money up in a fixed rate bond or take out an ISA to beat inflation, the current low CPI rate means that savers can actually choose from nine easy access accounts or 19 notice accounts as well; giving you more options to spread your money.
The bad news is this could now signal less pressure on the Bank of England to increase interest rates as inflation is below target and seemingly under control.
Industry predictions are that we should see the first interest rate rise in spring 2015, although truthfully no one can be certain. One thing for sure is that there has been little correlation between savings rates and the base rate for some time now, as savings rates continue to come crashing down. Therefore, many savers may not necessarily reap the full benefit of a rate rise when it does eventually happen.
As we've said before and we'll say it again, the trick in the current climate is to spread your money between a selection of accounts to access the best rates now, but also hope to get some benefit from future rate rises. This can range from high interest paying current accounts, ISAs to fixed rate bonds.