UK Savers Lose £36 Billion to Inflation

With high inflation wiping £36 billion off the value of UK consumer savings, it’s high time to shop around for the savings accounts with the best returns.

British savers have lost £36 billion to high inflation over the last year, according to figures released by accountants UHY Hacker Young.

On average, savers receive only a 1.6% return on their money, with higher return accounts such as ISAs and fixed rate bonds now paying out average interest of only 2.57%.

Compare those returns to the latest inflation rate of 5.2%, as measured by the Retail Prices Index for April, and you can calculate that UK consumers have seen £36 billion wiped off £1.003 trillion of savings.

And even if you use the Consumer Prices Index, its lower inflation figure of 4.5% will have wiped £29.42 billion off UK current and savings account deposits.

The figures are bad news for savers, and you need to shop around to get the best rates – although expect leaner pickings than normal. The highest rates available at present come from five-year fixed rate ISAs, so you will lock your money away to make the best return.

Inflation is causing other problems for UK consumers in the current climate, notably by pushing up utility bills – so it’s also important to make sure you switch to the cheapest energy supplier for your home.

But why is inflation so high? Some commentators point out that it’s helpful for the UK government to inflate away the national debt – and if that’s the case, better deals for savers could be a long way off.

Moneyhighstreet says: “While inflation rates remain high, there’s not only a squeeze on household bills but on savings accounts. High inflation combined with low interest rates can actually see money wiped off the value of your savings, so be sure to compare different savings accounts to get the best deals.

“For the best returns, ISAs are hard to beat. You can put up to £5,340 into an ISA this year and there are many accounts available, such as the new fixed rate ISA from Leeds Building Society.”