SAVERS have been offered some respite after inflation hit its lowest rate for two years.
The consumer price index fell from 2.3 per cent in November to 2.1 per cent in December, the Office for National Statistics (ONS) has revealed.
It is the lowest rate since January 2017 and was pushed down by falls in petrol prices and airfares.
Read more: Lower inflation could boost P2P investments
Investment platform Hargreaves Lansdown said this has now boosted the number of savings accounts and cash ISAs that beat the cost of living figure, but pointed out that a portfolio approach of spreading funds across different products was still best.
“It’s finally a small break in the dark clouds that have hung over savers for so long. It means that active savers can now fix their savings for the time period that suits them best – and still beat inflation,” Sarah Coles, personal finance analyst for Hargreaves Lansdown, said.
“Of course, we always have to remember that inflation looks backwards, and we are fixing rates for the future – so there’s no guarantee that inflation won’t rise again in the future.
“The best way to protect your savings from inflation is to take a portfolio approach – keeping an emergency savings safety net in easy access, fixing the cash you expect to need over the next five years over the period that suits you best, and then considering a stocks and shares ISA for any money you don’t expect to need for five to 10 years or more.”
Most peer-to-peer and Innovative Finance ISA products already currently beat the inflation rate.
For example, investors can access rates of 4.5 per cent with Zopa’s Core product and 5.2 per cent with Plus, or from 3.4 per cent with RateSetter.