Good news for savers as inflation falls

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Britain's beleaguered savers and pensioners were today handed a lifeline with the news that inflation fell from 2.8% to 2.4% in April 2013, thanks mainly to lower petrol prices and lower air fares.

The drop in consumer price inflation means that basic-rate taxpayers now need to find a savings account paying 3% gross in order to match or beat inflation; while higher rate taxpayers need to find an account paying at least 4% gross.

Jamie Perkins, partner at adviser Westminster Wealth Management, said: "Beleaguered savers and pensioners will be glad of the respite, but many British households continue to feel the pinch. Even with the drop in inflation, prices are still rising six times as fast as average wages."

Moreover, there remain few savings accounts that will stop savers' cash from being eroded by the cost of living.

"The current best-buy tables make for depressing reading," says Andrew Hagger of Moneycomms. He says the best one-year fixed-rate bond – offered by Principality Building Society or Saffron Building Society – pays just 2%. Even if you fix for five years, the best deal is just 3% with Virgin Money.

Find the best Cash ISA or savings account for you also identifies Dudley Building Society's 1 Year Easy Saver as a best buy, paying 3% gross. Some accounts aimed at first-time buyers saving for a property deposit also pay 3%, though they are not open to everyone.
"If you haven't used your ISA allowance, take a look at Cheshire Building Society's 2.3% tax-free rate or NS&I's Cash ISA paying 2.25%," Hagger suggests.

Instant-access savings accounts are, of course, even poorer. You can get 1.7% with Derbyshire Building Society, 1.65% with Triodos Bank and 1.5% with the Post Office.

Hagger says some people prepared to take on more risk might look to the peer-to-peer lending market to find a better rate. "For example, Ratesetter is offering 3.7% on a one-year fix, but there is no Financial Services Compensation Scheme guarantee."

RateSetter, like Zopa, does offer protection via its own provision fund, but this is not a 100% cast-iron guarantee, so many savers will not be prepared to take the risk.

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Hardly call this " GOOD NEWS "!!!!!!!!!!!