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Savers continue to be hit by inflation

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The rising cost of living remains a problem for savers.

The latest rate of inflation as measured by the Consumer Prices Index now stands at 3.7 per cent.

Once inflation and tax are taken into account, basic rate taxpayers would need an account that delivers an interest rate of 4.625 per cent for a return on their money. For higher rate taxpayers, that figure climbs to 6.17 per cent.

Only one account offers just such a return for basic rate taxpayers, while there are none for higher rate taxpayers.

Andrew Hagger of the comparison website said: “There seems little prospect of inflation easing in the near future on the back of soaring fuel costs, and at this rate CPI will soon be double the government’s inflation target of 2 per cent. Pressure is building for an interest rate rise, and the sharp rise in the CPI figure will hopefully make those in power sit up and take notice.

“Savers have been hammered by the government’s low interest rate strategy, whilst some mortgage customers have enjoyed far lower demands on their budgets. With swap rates starting to rise, and with it some fixed mortgage rates, perhaps the tide is starting to turn.”

With official interest rates still marooned at 0.5 per cent, savers may actually find that their money is losing value.

A higher rate taxpayer could be leaking as much as £330 annually on a £10,000 savings pot.