Newly released accountancy figures show that soaring inflation has eroded £36 billion worth of cash in the nation’s savings accounts over the past 12 months.
The average 1.6 per cent interest rate on savings and current accounts has fallen far behind the rising costs of living in the UK. This past April the Retail Prices Index, the metric used to measure inflation, rose to 5.2 per cent for the year.
The cash savers deposit in personal and business bank accounts has lost billions of pounds in value for failing to match the growing inflation rate, sources say. UHY Hacker Young remarked that out of the £1.003 trillion held in savings accounts in the UK has seen its actual value decline £36.45 billion since April of last year – even with the £15.75billion in earned interest throughout the last 12 months.
Savers have had little recourse in interest rates since the base rate has been languishing at a record low. The Bank of England’s Monetary Policy Committee set the rate at 0.5 per cent more than 27 months in a row
The BoE commented that a rate rise could shatter the currently fragile economy in the UK, playing down fears of inflation even though Scottish Power had to increase its gas charges by 19 per cent due to rising wholesale costs.
The RPI is not the only metric for measuring inflation in the UK. The Consumer Prices Index, which is the preferred inflation measure for the Government, is still high at 4.5 per cent – meaning that savers’ cash has declined in value by £29.42 billion since April 2010.
UHY Hacker Houng partner, Mark Giddens, said that he found the study’s results shocking. Warning that savers should not look to the High Street for respite any time in the near future, Mr Giddens urged savers to look over the best buy tables to ensure they’ve got the best deal for their cash.