CPI up for first time in six months

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The consumer prices index (CPI) measure of inflation in the UK rose to 3.5% in March, from 3.4% the previous month, according to the Office for National Statistics.

The main reason for the rise was the increase in the prices of food, clothing, recreation and culture. Falling prices of electricity, gas and transport kept the rate from rising further.

The retail prices index (RPI), which includes mortgage interest payments, fell slightly to 3.6% from 3.7%. This is its lowest rate since December 2009 and falling prices of fuel, electricity and motoring costs were the main reasons for the fall.

To beat inflation, a basic-rate taxpayer needs to find a savings account paying at least 4.38%, while a higher-rate taxpayer needs an account of at least 5.83%.

Inflation-beating accounts

This is the first time in six months that the consumer prices measure of inflation has risen but there is still a range of 50 savings accounts on the market that negate the effects of tax and inflation – up from 25 a year ago.

"CPI is on the rise again, and savers all over the country must be heaving one big sigh of frustration," says Sylvia Waycot, spokesperson for Moneyfacts.

"Today's rate of inflation means hundreds of thousands of savers need an account paying a hefty 4.38% before they earn a real rate of return on their savings. Yet the average no-notice savings account only pays a paltry 1.05%, showing the size of the problem many still face," she adds.

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