Consumer Price Index rise could affect savers

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Consumer Price Index rise could affect savers

Tue 19th Jan 2010

Savers could find their investments are not growing as fast as they would like, following the news that the Consumer Price Index (CPI) has risen.

The CPI now stands at 2.9 per cent, which is higher than the government's two per cent target for the first time since May last year, Moneyfacts.co.uk has stated.

Currently, the average no notice rate on a savings account is at 0.75 per cent, which is not far from the Bank of England base rate of 0.5 per cent.

The website estimates that a basic rate taxpayer needs a rate of at least 3.63 per cent to see any return on their savings.

Darren Cook, spokesman for Moneyfacts.co.uk, commented: "Inflation is starting to make its unwelcome mark on people's spending power and with savings interest rates stuck at their historical low, there is little that savers can do to fight back."

Earlier this month, Moneyfacts.co.uk reported that savers were losing out on getting good returns on their money in favour of lower interest rates for mortgage borrowers.

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