How can your savings beat inflation?

Inflation rose last month, with CPI increasing to 3.7% in December. The Bank of England predicts that inflation will decrease towards the end of the year and into 2012. However, the opposing view is just as prominent with many believing we are entering a period of ‘stagflation’ where the economy is stagnant but inflation remains relatively high. Interest rates are at an all time low, and are likely to stay low, despite calls for them to rise.