So, inflation has gone up. Unexpectedly, it rose to a 22-month high of 1 per cent this week, with the full force of a weak pound and other rising prices fuelling the leap.
This means more bad news for savers who are already concerned about the eroding power of inflation on their cash. The rise caused a bit of a shock, as many economists had predicted a much smaller increase to 0.8 per cent, up from 0.6 per cent the month before. Now adjusted analysis shows we could see inflation exceeding the 2 per cent target as soon as next year.
What does this all mean for savers? Well, there is currently very little choice in deals that pay 1 per cent or more, and it’s only going to get worse. There seems to be no end to savings rate cuts, with around 680 cuts made since the start of August.
Not only have savers borne the brunt of a Bank of England base rate cut, they also have to deal with scarce competition among providers thanks to government lending initiatives.
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