Savers are feeling the full effects of rising inflation.
People who are managing to set aside extra money in savings accounts are not making a return.
The fifth successive month of rising inflation is preventing savers from making a real return on their saved cash.
CPI hit 4.4% last month and RPI rose to 5.5%, the highest level since 1990. As a result the savings product market has become almost bereft of accounts that pay enough interest to negate inflation.
Basic rate taxpayers in need of an account that pays out at least 5.51% have a pool of just eight savings products to choose from – six months ago 118 were in existence. All of these options are fixed-rate tax-free ISAs where savers have to lock away their cash for at least three years in order to make a return.
Sylvia Waycot, spokeswoman for Moneyfacts, which gathered the data, said: “People trying to save a deposit for a first home will see inflation eating into their hard-earned savings faster than it grows unless they seek out the few accounts that can keep pace with inflation”.
Older savers were described as “innocent victims” of monetary policy by Dr Ros Altmann, director general of Saga, who is calling for an interest rate rise to dampen down rising inflation. She said: “This is a disgrace – yet another hammer blow for savers as inflation continues to erode their income. And it is those approaching retirement who are the worst affected – the very group who need to save most”.