With inflation rising to 3.8% in July, more than half of available savings accounts no longer offer rates that can beat the pace of price rises, according to data from Moneyfactscompare.
The Moneyfacts Average Savings Rate now sits at 3.47%, meaning many savers will need to shop around to avoid losing money in real terms.
The Consumer Price Index (CPI) rose from 3.6% in June and follows the Bank of England’s decision to cut interest rates from 4.25% to 4%, which prompted savings account providers to cut variable rates.
Caitlyn Eastell, spokesperson at Moneyfactscompare, said: “After almost a year and a half of savings growth, many people are slipping back into earning negative real returns as inflation figures jump again.
“With inflation running higher than the interest savings earn, money left languishing in a low-interest account is losing its spending power – making it tougher to achieve a sense of financial resilience or save towards goals such as a car, house or comfortable retirement.”
There are currently 956 savings accounts that beat the new inflation figure – 85 easy access, 86 notice accounts, 79 variable rate ISAs, 210 fixed rate ISAs and 496 fixed rate bonds.
Options beating inflation include Ulster Bank’s easy access account (5.2%), OakNorth Bank’s one-year fixed rate bond (6%) and UBL UK’s one-year fixed rate ISA (5.8%, payable on maturity).
“It is crucial savers review their current deal and if they are earning less than 3.8% to immediately search for a better deal,” Eastell said.