Savers had some rare good news this month, as it was revealed that inflation remained static at 2.4 per cent in October.
Coupled with the recent spike in savings rates, this means that there are now more than two dozen savings accounts offering inflation-beating returns.
“28 savings accounts now match or beat inflation, though you typically have to tie your money up for a number of years as part of the deal,” said Sarah Coles, a personal finance analyst at Hargreaves Lansdown.
“On the face of it, this looks like some light at the end of the tunnel for cash savers, many of whom have seen inflation eating away at their savings for years, while they languish in dismal savings accounts.
“However, inflation measures price growth in the past, whereas if you fix into these accounts, you’re sticking with this rate for the future.”
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The rising cost of fuel and utility bills were offset by a fall in the price of clothing and footwear prices, keeping the Consumer Price Index at 2.4 per cent for the second month running.
The Bank of England’s target rate of inflation is two per cent, yet the actual rate of inflation has been above this since February 2017.
Meanwhile, the low base rate and sluggish economy has kept savings rates low. However, analysts said that the static inflation rate would not inspire the Bank of England’s Monetary Policy Committee to raise the base rate again.
“While rising inflation – which is already above target – would normally give policymakers at the Bank of England incentive to consider hiking interest rates, the wider economic picture continues to be clouded by the spectre of Brexit uncertainty, despite the latest news about a draft agreement,” said Ed Monk, associate director for personal investing at Fidelity International.
“Nevertheless, the Bank of England is likely to remain in ‘wait and see’ mode to ensure it doesn’t unnecessarily disturb the delicate state of the UK economy.”