Inflation Hits UK Savers Hard
Inflation really is getting out of control for savers.

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Inflation figures released today show the Consumer Prices Index fell during December from 4.8% to 4.2%.

I am not sure about you but it is starting to feel more like the 1970's than more modern times.

Moneyfacts.co.uk has been reporting this week that in order to beat inflation, a basic rate taxpayer at 20% needs to find a savings account paying 5.25% per annum, while a higher rate taxpayer at 40% needs to find an account paying at least 7.00%.

Only, like you I am not sure that there are that many accounts that will offer this kind of return. Moneyfacts also said that

"today there just eight standard savings account that taxpayers can choose to negate the effects of tax and inflation and these are all fixed rate ISAs"

It also gets a little worse than that.

"The effect of inflation on savings means that £10,000 invested five years ago, allowing for average interest and tax at 20 per cent, would have the spending power of just £9,213 today."

Sylvia Waycot, spokesperson for Moneyfacts.co.uk, said:

“The wheels of UK finance would shudder to a stop without the nation’s savers and yet they still see little reward for their investment."

I kind of agree with them on that point.

“The few accounts with headline rates are often brief introductory offers making savers need as many heads as Medusa, just to keep abreast of fluctuating savings rates."

Today’s rate of inflation means hundreds of thousands of savers need an account paying an hefty 5.25% before they earn a real rate of return on their savings and yet the average no notice savings account only pays a miserly 0.91%.

“This means more and more people are falling into ‘the eroding spending power trap’ which has already wiped nearly £800 off the spending power of £10,000 in just five years."

“Over the previous 12 months the number of savings accounts that beat inflation for basic rate taxpayers has dropped successively from a not very exciting 22 to only eight, which leaves savers feeling desperate.”

There is a solution for all of you savers looking for better returns without plouging money into the investment markets like sheep to a fresh meadow. Genuine opportunities have always been around and I am happy to provide some more information or have a conversation if you would like to know more.

If it's one thing 23 years in financial services has taught me, it's this. If you think the same as others you end up with the same as the others.

I look forward to hearing from you if you are genuinely looking to increase your income returns.

Richard Smith

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