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Savers continue to be hit by inflation

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The rising cost of living remains a problem for savers.

The latest measure of inflation by the Consumer Prices Index now stands at 3.7 per cent. Once inflation and tax are taken into account, basic rate taxpayers would need an account that delivers an interest rate of 4.625 per cent for a return on their money. For higher rate taxpayers, that figure climbs to 6.17 per cent.

Andrew Hagger of the comparison website said: “There seems little prospect of inflation easing in the near future on the back of soaring fuel costs, and at this rate CPI will soon be double the government’s inflation target of 2 per cent.

“Savers have been hammered by the government’s low interest rate strategy, whilst some mortgage customers have enjoyed far lower demands on their budgets. With swap rates starting to rise, and with it some fixed mortgage rates, perhaps the tide is starting to turn.”