UK Savers Face Inflation Squeeze as 20% of Accounts Fall Behind

UK inflation has jumped to its highest level in four months at 2.9 per cent, partly due to rising energy bills caused by the Iran war. According to Moneyfacts data, most savings accounts are still beating this rate, but a worrying 20 per cent of them are not keeping up with inflation. Caitlyn Eastell, personal finance analyst at Moneyfactscompare.co.uk, notes that savers must pay close attention to their account rates as those paying below inflation will see the value of their money eroded.

For example, an easy access savings account with a top rate could leave someone with £10,000 up £210 better off once inflation is accounted for. However, on average, the real gain from most savings accounts falls to just £73, which is still better than having an account paying 2 per cent that would result in a loss of around £90.

Eastell advises savers to check their current rates and shop around for higher-paying alternatives as inflation is expected to move even higher. This could make the difference between growing savings in real terms or quietly losing value, according to Eastell.