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Savers fail to earn real returns
Savers still face a struggle to earn a real return on their savings, despite the fall in inflation in November, experts warn.
Data released on Tuesday showed that the consumer prices index – used
by the government to measure inflation – recorded an annual rise of 4.8 per cent
in November, down 0.2 percentage points on the previous month. Similarly, the
retail prices index– seen by some as a more accurate gauge, as it includes
housing costs – fell from 5.4 per cent in October to 5.2 per cent.
However, that still means a basic-rate taxpayer needs to find a savings account paying 6 per cent a year to beat inflation, while those paying the higher 40 per cent tax rate need to find an account paying at least 8 per cent.
“Savers continue to lose out to inflation,” said Sylvia Waycot of Moneyfacts, a data provider website. “With returns so low and inflation unsteady, people don’t know which way to turn.”
With CPI inflation remaining well above the Bank of England target of 2 per cent, savers are seeing the value of their cash continue to diminish.
According to Moneyfacts, £10,000 invested five years ago would have the spending
power of just £9,210 today, assuming average interest rates and tax at 20 per cent.
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