Falling inflation is good news for UK savers

Today's announcement by The Bank of England that inflation has fallen to 3.0 per cent, from 3.5 per cent in April, is a welcome boost for UK savers as 46 saving accounts now beat inflation, according to MoneySupermarket.com.

To beat inflation, basic rate tax payers now need an account paying at least 3.75 per cent to gain benefit in real terms from their savings, increasing to five per cent for higher rate tax payers, and six per cent for 50 per cent tax payers.

For basic rate tax payers there are 31 fixed rate bonds and 15 cash ISAs that will beat inflation. Higher rate tax payers will still struggle to beat inflation, with just one account beating inflation; the Nottingham BS Starter ISA Issue 2 at 5.02 per cent which is fixed until 05.04.2013.

Kevin Mountford, head of banking, at MoneySupermarket.com, said: "The fall in inflation is great news for hard pressed savers, particularly after the increase we saw in April, and this should really help encourage people to start saving again.

"High inflation combined with low interest rates has made it a tough environment for UK savers who have found it very difficult to gain any real returns on their savings pots. With this dramatic fall in inflation, there is a welcome boost in the number of savings accounts which now beat inflation, and consumers need to make sure they are on the best deals possible to maximise their returns.

"Households should also ensure they regularly review all their finances and find ways to maximise their income. Consumers need to make sure they are not paying over the odds for expenses such as energy, household bills and insurance. Using MoneySupermarket to switch to the best deals can save over £1,000 and free up additional cash to help offset the pressures of the cost of living."