Beat inflation with Leeds Building Society's Inflation Buster Accounts

Leeds Building Society's Inflation Buster Bond and ISA, which are guaranteed to beat rising inflation by 2.25%, are proving very appealing to both basic and higher rate taxpayers.

The Inflation Buster Bond and ISA are guaranteed to beat inflation by paying RPI plus 2.25% and would pay a return of 7.30% if RPI over the term is equal to 5.05%, which is the latest figure released by the Office for National Statistics for July 2008.

The Retail Price Index (RPI) is the official measure of how much 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.

Today's Bank of England Inflation Report stated that ‘Higher energy, food and import prices push inflation substantially higher over the next few months.'

Karen Wint, General Manager Marketing and Customer Services said "The latest RPI figure of 5.05% for July is up from 4.58% in June, meaning that savers have already seen their real return eroded in the last twelve months by 5.05%."

The Inflation Report went on to say ‘The main risks to inflation have both increased since the May Report. Overall, the balance of risks to inflation is judged to be on the upside.'

Karen Wint added "The inflation rate is the percentage difference between RPI on two dates. The index figure for July 2007 was 206.1 and the figure for July 2008 was 216.50, therefore the percentage change in RPI and the inflation rate over the period was 5.05%. In this scenario, inflation is 5.05% and Leeds Building Society's Inflation Buster Bond would pay a return of 7.30%.

"However, because the Inflation Buster ISA is tax-free, that's equivalent to 9.11% for basic rate tax payers and an impressive 12.13% for higher rate tax payers. In addition, 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.

"There is also the opportunity to put further savings into the Inflation Buster Bond, which has a maximum investment of £1,000,000 and £2,000,000 for joint accounts."

For more information, visit leedsbuildingsociety.co.uk