13th January 2015 by The Harried House Hunter
This week’s announcement that CPI inflation has fallen to just 0.50% surprised the markets, and has been widely welcomed.
It certainly is good news for savers that the value of the money they have in accounts is not being eroded so quickly. But, the good news is tempered by the fact that still, almost 30% of savings accounts in the UK are not paying enough interest to beat inflation, even at this historic low level.
The low inflation rate is great news in theory but the concern is if the low inflation level reduces the pressure on the Bank of England to increase interest rates, there will be no relief in sight for savers. Indeed, currently, savings rates are still falling so savers need to be savvy with their cash, and make sure they check the interest rates they’re getting.
Rate reduction stats
The table above shows how many savings accounts have seen rate cuts for existing account holders each month. As you can see, things really kicked off not long after Funding for Lending was introduced in August 2012 and has been continuing ever since. After a much higher number of cuts in October, November and December were quieter months, but this is probably more due to an end of year slow down, than the start of a reprieve for savers. One of the main reasons for this is that some announcements have already been made for January and February 2015. The numbers are higher for January than November already and we have only just started the month. More cuts are expected before the month is over.