INFLATION hit a seven-month low last month but there is little sign of respite for interest-starved savers as ISA season approaches, figures show.
Official for National Statistics (ONS) data shows consumer price inflation (CPI) grew by 2.7 per cent in February, finally falling from its five-year high of three per cent but still above the Bank of England’s two per cent target.
The rate had been stuck at around three per cent since September, but was pushed down last month by lower fuel, restaurant and hotel costs, the ONS said.
Read more: Inflation hits a five-year high
Despite the drop, comparison website Moneyfacts said there are still no standard savings accounts that beat inflation and the best easy access cash ISA rate you can get is 1.3 per cent.
“Savers who are eyeing up ISAs will be pleased to see that over 20 providers have made a move by increasing rates, including big brands such as Nationwide, who launched a table-topping 1.3 per cent on their easy access ISA,” Rachel Springall, personal finance expert for Moneyfacts, said.
“But still, with inflation sitting at 2.7 per cent, savers’ cash is being eroded in real terms. In comparison to last year, savers would have found it difficult to get one per cent on an easy access ISA.”
The fall should ease pressure on the Bank of England when the monetary policy committee makes its latest decision on interest rates this Thursday 22 March.
Giles Cross, chief executive of peer-to-peer lender Folk2Folk, said savers shouldn’t wait around for rates on their cash to rise.
“Even if the Bank of England decides to raise interest rates, many are still doubtful that consumers will actually see the results of this, especially given how some banks are failing to pass on the results from the previous rate rise,” Cross said.
“Even so, rates would need to rise a significant amount to make any notable difference to consumers.
“Those looking for ways to get a positive return on their money should see the start of the new financial tax year as the perfect opportunity to explore different saving avenues.
“The investment sphere is ever changing, with the extension of ISA limits and the introduction of new products such as the Innovative Finance ISA. By allowing P2P lending platforms to be part of the ISA wrapper, investors are now benefiting from inflation-beating rates without the volatility of the stock market.”
Read more: Cash ISA savers left £4bn short by inflation