The latest reports from ONS (Office for National Statistics) show a fall in the rate of inflation, down to its lowest in two years. In this feature, Lucinda O’Brien, an expert at money.co.uk savings accounts, looks at what this could mean for savers.
The welcome news means prices are now rising at the slowest rate since October 2021, with the cause being attributed to lower energy prices – with gas falling by 31% over the previous 12 months and electricity by 15.6%.
Despite the reduction in the inflation rate, everyday costs are still rising. The annual rate of increase in food and non-alcoholic drinks was 10.1%, according to the latest data.
Financial experts at money.co.uk savings accounts reveal what the new rate means for you and your savings potential.
Lucinda says, “Undoubtedly, the sharp fall in UK inflation is a boost to Brits savings potential. However, it’s important to note everyday costs still continue to rise, so we shouldn’t get too carried away when putting money away.
“As such, an easy access account may be a good option for those looking to benefit from the inflation rate drop. There are a few providers offering interest rates for easy access accounts that are above the new rate of inflation, meaning people can have their money work for them but still have the option to withdraw when they need to.
“Currently, Cynergy Bank’s Online Easy Access Account is offering a 5.15% interest rate. You can open this account with just £1 and enjoy unlimited withdrawals.
“However, for those who have a little bit extra cash lying around, and hopefully even more so following today’s news, a fixed-rate account could be a better option. One of the best on the market currently is FirstSave’s 1-year bond, which offers a 6% interest rate for a 1-year fixed-rate bond.
“Whatever you choose to do with your savings, it’s important to remember the inflation rate does tend to fluctuate, so be wary and keep an eye on this to ensure you’re financially stable should an emergency strike.”
“The last few years have been incredibly financially turbulent, so having an emergency fund to fall back on if needed can save you from having to resort to other methods, such as excessive credit card spending, loans or BNPL (Buy Now Pay Later) services in order to get by.”
For more information and guidance on saving, including the best savings rates available today, visit https://www.money.co.uk/savings-accounts.
The above research is based on a survey of 2001 respondents, carried out by money.co.uk savings, undertaken in October 2023.
Read more financial news and features here.