Inflation falls again to 2.8%

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UK inflation fell again in May with the consumer prices index (CPI) rate dropping to 2.8%, from 3% in April, according to the Office for National Statistics (ONS).

This is the lowest level of inflation since November 2009 and the main reason is because of a fall in fuel and food prices.

The retail prices index (RPI), which includes mortgage interest payments, also dropped to 3.1% from 3.5% in April.

A basic-rate taxpayer now needs to find an account paying at least 3.5% to beat inflation, while a higher-rate taxpayer needs an account paying 4.7%.

To demonstrate how inflation has affected saver's cash, a sum of £10,000 five years ago would now have the spending power of £9,209.

Hardship to continue

There are now 210 standard savings accounts, out of 1,454, that negate the effects of inflation and tax - a rise from 159 accounts last month.

"Today's fall in CPI is to be welcomed, although the nation's savers will be slow to cheer as their hardship continues with little relief," says Sylvia Waycot, spokesperson for

She adds: "UK savers are not fat cats moaning because their huge investments aren't making enough; they are predominantly people who have saved all their lives to help supplement incomes when they retire. It is sad that this frugality now offers little to no reward."

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