🔔 Inflation rises but remains below the Bank of England’s target

Analysts were correct in predicting that inflation would remain below the Bank of England’s target, but the consensus was that the rate would remain static rather than rise.

The Consumer Prices Index (CPI) rose by 1.90% in the 12 months to February, up from 1.80% in January – with the higher rate mainly driven by rising prices for food, alcohol and tobacco.

According to the Office for National Statistics (ONS), the largest upward contributions to the CPI rate were rising prices for food, alcohol and tobacco, as well as across a range of recreational and cultural goods – such as games, toys and hobbies and in particular computer games.

The upward effects were partly offset by clothing and footwear prices – particularly women’s footwear – which rose between January and February this year by less than they did over the same period last year.

So, not the best news for anyone that enjoys their food, wine and cigarettes!

Despite the rate of inflation rising, the good news for savers is that there are still plenty of savings accounts to choose from that match or beat inflation – read on for more details on the top-paying accounts currently available.

Of course, the key thing to remember is that inflation is a very personal thing – how and where money is spent varies considerably between individuals and so the CPI measure should be viewed as a general indication of the prices of goods and services – only you really know if your own costs are rising and by how much.

However, inflation can be an effective indicator of how things are going in the wider economy.

Few experts predicted the rise in inflation, with most of the commentary before the announcement assuming that CPI would remain static this time around.  

Experts seem to disagree about how the rate of inflation will fare going forward, with some suggesting that this is the start of an upward trend and therefore will not stay below target for long. Others suggest that over the longer term inflation would stay near to the 2% target. So, as ever it’s a case of wait and see!

The prospects of the Monetary Policy Committee (MPC) raising the base rate when it meets tomorrow already seemed unlikely and this announcement reduces the likelihood even further. That said, strange things have happened before.

While, on the face of it, today’s announcement is not such good news for savers, the current rate of CPI inflation, combined with the fact that best buy savings rates continue to move in the right direction, means that there are still a number of savings accounts to choose from that match or beat CPI.

A selection of the best rates from different categories are included in the table below.

For active savers, by choosing the right savings account it is still possible to ensure that your savings are protected against the effects of inflation as far as possible.

It is still the case that many savers are languishing in savings accounts that are paying lower rates than inflation - particularly those held with the high street banks.

But savers do not have to take this lying down and accept paltry rates - switching accounts is far better than leaving your money earning next to nothing and by taking advantage of best buy rates, you can reduce the effects of inflation on your hard-earned savings – if not eradicate it.

Take a look at our independent best buy tables or call us on 0800 011 9705 for help finding the most suitable accounts for you.

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