Savers lose out as inflation rates hit two-year high

UK savers are being hit again, as rising inflation reaches its highest point in two years at 1.6%, from 1.2% in November.

Last month, the Consumer Price Index reached 1.6%, the highest level since July 2014. According to the Moneyfacts website, this means that of the 669 savings accounts available on the market, just 44 can either match or beat the level of inflation. Of the 44 accounts, none offer easy access, as most of them are fixed rate bonds, and they have to be left intact by savers for three years or longer.

Rachel Springall, a Moneyfacts finance expert said:

“It will be no surprise if we start to see savers sacrifice the necessity to make savings provisions for the future in favour of overpaying their debts, particularly as there is little interest to be gained on most savings accounts currently on the market.”

According to the Office of National Statistics, the main factors of the inflation rate increase are higher air fares, food price increases, and the cost of motor fuel, which didn’t reduce as much as it did one year earlier.

The Retail Prices Index includes housing costs when it measures inflation, and increased from 2.2% in November to 2.5% in December. The Governor of the Bank of England, Mark Carney, said that the bank will only tolerate a limited amount of inflation, while analysts expect interest rates to increase during 2017.

Savers and investors will be struggling to increase investments, and should consider professional investment planning.

Source: http://www.thisismoney.co.uk/money/news/article-4127134/UK-inflation-hit-highest-level-two-years.html