Customers with savings accounts may have cause for celebration after recently published official figures indicate that inflation unexpectedly dropped last month.
According of the Office of National Statistics, the consumer prices index now stands at 4.2 per cent, down from 4.5 per cent as it was in the previous month. This could spell the beginning of relief for UK savers who have been tossed about on stormy economic seas as the interest rates on their savings products have been outstripped by rampant inflation.
Figures recently compiled show that savers may have missed out upon an eye-watering £72 billion in lost interest since the Bank of England’s Monetary Policy Committee reduced the base rate to its current historic low of only 0.5 per cent.
This rate has held out for 29 consecutive months, as MPC members were fearful of endangering the nation’s already tenuous economic recovery efforts. However, the Government’s 2 per cent inflation target is still well out of reach for the BoE, and as the months go on, more and more of savers’ hard-earned cash is getting devalued through a combination of paltry interest rates and runaway inflation.
With inflation of 4.5 per cent for one year, £10,000 worth in savings has its buying power eroded to effectively stand at only £9,550. If inflation rates remained unchanged for half a decade, that £10,000 would only be worth £7,944.
Save our Savers campaigner, Simon Rose, recently spoke out on the news, stating that savers will find cold comfort in the slight reduction of the CPI in June. Mr Rose called it ‘scandalous’ that, in his opinion, both the Bank of England and the Government are seemingly using runaway inflation as a policy tool to skim about £60 billion worth of interest off the top from savers.