Inflation in UK jumps: CPI more than doubles in one month raising ‘challenges for savers’ | Personal Finance | Finance

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Today’s inflation figures from the ONS show prices have risen significantly, jumping to 1.5 percent in April. This is up from 0.7 percent in March and from 0.4 percent in February this year.

“There is concern that this creates inflationary pressures that push rates well beyond both the target and anything that consumers have had to deal with in recent years or for many in living memory.

“A sustained period of low inflation has blunted people’s fear of inflation.”

Mr Cameron went on to discuss the impact it could have on savers.

“There’s now a growing realisation that high inflation could be around the corner, which reduces individual’s purchasing power and what they could buy with their savings over time,” he said.

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“Keeping money in the bank typically earns interest, but if the interest rate is lower than inflation, money or purchasing power is effectively being lost.

“With interest rates at historic lows, just scraping above zero, any amount of inflation raises challenges for savers.”

Yesterday, it was suggested a spark of hope for savers could be a “flash in the pan”.

It comes amid a slight increase in interest rates available on savings accounts.

Last month, at the start of the new tax year, the best one-year fixed rate savings account in the market offered 0.65 percent.

It’s now possible to get up to 0.85 percent, Hargreaves Lansdown pointed out.

Sarah Coles, personal finance analyst at Hargreaves Lansdown, commented: “The house-buying frenzy has brought fresh hope for savers.

“Banks need more cash to back their mortgage lending, so they’ve been forced to boost savings rates.

“However, there’s a risk that this house-buying boom will burn itself out this summer, so the spark of hope for savers could be a flash in the pan.

“If you’re looking for a new home for your money, particularly if you want to tie it up in return for a better rate, it’s well worth acting sooner rather than later while the best deals are around.

“Atom is currently offering 0.85 percent over one year, Zopa is offering 0.9 percent over two years and 1.01 percent over three, while Gatehouse Bank is offering 1.4 percent over five years.”

Sharing her thoughts on the matter, Ms Coles added: “The banks that are topping the rates tables aren’t the big high street brands, they’re the smaller institutions with more limited capacity.

“Being at the top will bring a lot of money through the door, so the products might not be around for long.”





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