Inflation jumps to 2.70% so there are NO easy access or notice accounts paying more than inflation. But is that really the full story?
Savers may be shocked and dismayed to see the inflation figures for October, released this week. But for those who are retired or stay at home playing computer games, it may not be quite so gloomy.
CPI has jumped to 2.70% from 2.20% in September, a rise of over 20%! And RPI is up to 3.20% from 2.60% - good news for NS&I index linked certificate holders and RPI linked pensioners but possibly bad news for low risk savers.
The problem is that, as the interest rates on savings accounts have continued to fall, this new inflation figure means that there are now NO easy access or notice accounts that beat inflation for basic rate taxpayers and even non-tax payers can no longer open an easy access account that will stay in line with the official inflation figures. As for higher rate taxpayers, only cash ISAs can help them to beat inflation.
But is the situation as dire as it seems?
Possibly, but inflation figures are calculated using a basket of over 700 consumer goods and services, therefore it’s important for people to understand how they are affected personally. According to the Office for National Statistics (ONS) the main reason for the rise last month was the massive rise in university tuition fees, although there were also rises in the cost of food & non-alcoholic drink and the price of second hand cars and air fares, among other things. These rises were partially offset by either lower rises, or even reductions, in recreational costs, household costs, including regular home maintenance, and most surprisingly electricity, gas and other fuels, as the recent rises have not yet filtered through.
So if you don’t have children at university, you’ve got a free bus pass and you’ve been spending your money on DIY and playing computer games, perhaps it’s not as bleak as you thought!!
If you want to get a better idea of your personal inflation rate, click here to use the BBC inflation calculator. We’d love to hear from you about how your personal rate compares to the official figures, so please let us know by emailing us at [email protected].
However, with savings rates continuing to fall, it’s still vital for savers to find and track the best savings accounts for their circumstances (our free Rate Tracker is the perfect tool for this). Cash ISAs are an essential tool for those who do not want to invest in the stockmarket, but who do want to at least try to keep up with inflation! Check out our Best Buy tables.