Unique return on savings guaranteed to beat rising inflation

Leeds Building Society has launched new versions of its Inflation Buster ISA and Bond, which have proved very popular with customers looking for a real return on their savings.

The new accounts are guaranteed to beat inflation by 2.25%.

The returns are linked to the Retail Price Index (RPI), which is the official measure of how much the prices of goods and services bought by an average UK household changes. Items measured by the RPI include food, clothing, education and child care, council tax, heating and lighting and mortgage interest payments.

As Karen Wint, General Manager Marketing and Customer Services explains, the large energy price increases seen over the last couple of weeks make these latest versions even more attractive. Karen said "Centrica raised prices for British Gas retail customers by 35 per cent last week and the group has now increased gas prices by 44 per cent over the past year#. This followed EDF Energy, who said the price of gas would rise by 22 per cent and electricity by 17 per cent for its 5.5 million UK customers.

"In addition Mervyn King, the Governor of the Bank of England, stated in his opening statement to the Treasury Committee on 26th June that ‘Inflation is likely to rise further this year. Oil prices are now as high in real terms as they were in the 1970s. Wholesale gas prices have risen very sharply. And sterling has depreciated, pushing up the prices of imported goods. Over the rest of the year, the impact of these changes will continue to pass through the supply chain to household bills and consumer prices.'

Karen continued "Savers have seen their real return eroded with prices increasing by 4.58%~ in the last twelve months and, with the prospect of rising inflation, we expect demand for these latest Inflation Buster ISA and Bonds to be very strong."

The inflation rate is the percentage difference between RPI on two dates. The index figure for June 2007 was 207.30 and the figure for June 2008 was 216.80, therefore the percentage change in RPI and the inflation rate over the period was 4.58%. In this scenario, inflation is 4.58% and Leeds Building Society's Inflation Buster Bond and ISA would pay a return of 6.83%.

Karen added "Investors who have already paid in the maximum £3,600 in this tax year can still invest in the tax free version. This is because our Inflation Buster ISA has the option to transfer previous years ISA subscriptions and some customers, who have paid in the maximum allowance each year, may have built up a capital balance of £39,600 plus interest.

"Alternatively, savers with a larger capital balance may feel that the Inflation Buster Bond, with a maximum investment of £1,000,000 (£2,000,000 for joint accounts), better suits their needs.

"Furthermore, the accounts can be opened at any of our 69 branches, online or by post. I believe our new suite of Inflation products provide an excellent addition to any investor's portfolio."

For more information, visit leedsbuildingsociety.co.uk