Despite the tough economy and all time low interest rates, even on the best buy savings accounts, it seems that we are saving more.

According to ING Direct’s consumer savings monitor report, which survey’s around 1,000 people, savings ratios rose by 18% in the first quarter of 2012 compared to the same time last year.

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The rise equates to an average increase of £284 and takes the average savings in the UK to £1,858 per person, the highest level since the second quarter of 2010.

Repaying debt

Savers have been hit by low interest rates, increasing household bills and in many cases static wages, often leaving little or no money left over for savings or indeed any other form of financial planning.

However, the report said that careful budgeting as well as a desire to repay debt, has helped to increase savings levels.

ING Direct Chief Executive, Richard Doe, said: “Our research told us that ordinary Britons saw restoring savings as their top financial priority for 2012, but in the current climate we thought it would be tough for them to deliver on this.”

He continued: “Six months of relatively restrained spending may not have helped the economy in terms of GDP growth, but it has allowed Britons to deliver on their determination to restore their savings.”

Savings accounts to beat inflation

Despite the inclination to save more, careful consumers are still suffering from all time low interest rates, with even the best buy savings accounts struggling to beat inflation once tax is taken into account.

For a basic rate tax payer to beat inflation they need to tie up their savings for at least four years, whilst there are currently no accounts available which allow higher rate tax payers to beat inflation.

However, a non tax payer can beat inflation using a one year Fixed Rate Bond, whilst savers using a Cash ISA can beat inflation using an Instant Access Cash ISA, removing the need to tie up savings for a prolonged period.