Inflation wins by miles

According to the Daily Mail, there now isn’t a single savings account in the UK that pays interest above the rate of inflation.

With the inflation rate as measured by the Consumer Price Index up from 2.4% to 2.7%, the best easy-access account the Mail could find is an ISA paying 2.3%. Savers who are basic rate taxpayers would need to get 3.38% before tax to match the inflation rate while higher rate taxpayers would need 4.5%. With the top non-ISA account paying 1.7% gross, a saver putting in £1,000 would see their spending power decline to £986 after 12 months even after banking their interest. But the cuts go on – National Savings & Investments announced it was cutting the rate payable on its own ISA from 2.25% to 1.75% in September.

These are tough times for savers, who need to consider alternatives to standard savings accounts if they need a higher income.