Record low inflation, a temporary respite for savers
Inflation remained at 0% for another month in March 2015. The lowest level since records (estimates of CPI) began in the late 1980s. This means that the cost of living is pretty much flat, with clothing and footwear seeing the biggest fall in prices, although some of these falls were offset by a rise in the price of motor fuels and food.
This month, it was expected and in fact there was concern that we could dip into deflation. For savers however, especially pensioners, this could be seen as a good thing as your money now goes further and interest earned is now beating CPI inflation on all accounts.
Another month of 0% inflation gives some respite in what has been one of the toughest times in living memory for savers. Although all savings accounts now beat CPI inflation, the current dip is still expected to be temporary, so savers may not want to be complacent when deciding where to put their money. It’s still sensible to continue to ensure that your money is earning the best interest rates possible, especially since lower inflation means less pressure on the Bank of England to increase the base rate anytime soon.
With high interest paying current accounts offering rates of up to 5%, albeit on smaller savings balances, it pays to ensure you’re earning the very best rates, even if in the current low interest rate environment it may not feel like it makes a big difference. And with thousands of rates falling on existing savings accounts and more being cut every week, monitoring and moving your money to secure the best rates is the most effective way to make a real return in the long term.
Remember to sign up for our free Rate Tracker service in order to be kept informed of any rate changes to your savings accounts.