Inflation and George Osborne let down savers once again

Business banking news review: week ending 21 Feb 2013

Rising inflation and Chancellor George Osborne’s latest Budget have coincided to make things just that much harder for savers trying to put money aside.

It’s been a wonderful four months of the nation’s inflation rate actually holding strong at 2.7 per cent, but that came to an end in February according to the Office of National Statistics. The cost of living increased to 2.8 per cent last month a measured by the consumer price index, with the ONS attributing the increase to rising recreational goods pricing, petrol and diesel fuel costs, and ever-increasing utility bills.

With the CPI now at 2.8 per cent, this is the highest inflation has been since May of last year, and this means it’s just that much harder to find a savings account that will rise above both inflation and the base taxpayer rate. Savings products have been low-performing for much too long if you ask me, and while there are some bright spots here and there in the form of ISA savings products that hover around the 3 per cent interest rate mark.

Of course, George Osborne brought even more bad news to the forefront recently, with the Chancellor’s budget delivery coming just in time to throw a wet blanket over savers. The new Budget has little to nothing in it to actually benefit anyone who’s trying to put money away for the future, especially since Mr Osborne stubbornly refused to increase the cash ISA allowance to bring it into parity with investment ISAs.

Ordinary savers, those looking to purchase their first homes, and pensioners would all have reaped the rewards from a heightened annual cash ISA cap, according to industry experts, yet the Chancellor seems to have little interest in anyone who wants to save money instead of spend it. Yes it’s true our economy is flagging and for reasons I can’t quite fathom we’ve only narrowly avoided a triple-dip recession, but for what it’s worth I’d rather have a few extra pounds in my current account at the end of the month than be encouraged to spend it by my own Government.

I suppose the only thing we can do as savers is to just keep hunting for those best deals as we can. It will probably mean a lot of transferring from one savings product to another once the bonus rate expires every year, but unless you want to suffer under the iron boot of interest rates so low as to be under the rate of inflation, you’ve got no choice but to go through the motions.

© 2021 All rights reserved. Reproduction in whole or in part without permission is prohibited. See our copyright notice.

Tags: , , ,