Inflation has fallen to 2.2% in October, from 2.7% the previous month. This drop in the Consumer Prices Index (CPI) rate of inflation may come as a surprise to households who are feeling the squeeze thanks to ever rising utility bills.
But the Office of National Statistics revealed the fall was in part due to the biggest drop in transport costs since July 2009. This included fuel prices, which had been pushed down by a 'pump war' between supermarket chains.
Rather surprisingly, food inflation fell also - from 4.8% to 4.3%. But the price of food still rose - meaning an essentials shop that cost £100 in October 2012, cost £104.30 last month.
The fall in inflation does mean good news for savers - as now there are many more accounts on the market offering a real rate of return on cash, after inflation and basic rate tax.
“The outlook for savers has been tough, however the surprise drop in inflation will offer savers some respite," said Susan Hannums Director at Savingschampion.co.uk.
"Although many savings rates have been dropping over the last year, with inflation finally coming in closer to the its 2% target, the amount of available savings accounts that beat or match inflation has leapt up from 14 last month to 54."
This figure is a vast improvement on savers' prospects this summer, when just one savings bondbond offered savers a real return - and they had to lock their cash away for seven years to benefit.
The best paying savings accounts on the market, still require a seven year term - but there are also several four and five year fixed rate bonds paying in excess of 2.8%.
Best Paying Savings Accounts
Shawbrook Bank 4 Year Fixed Rate Bond pays 2.85%, with a minimum deposit of £5,000
Tesco Bank 4 Year Fixed Rate Saver pays 2.75%, with a minimum deposit of £2,000
Newcastle Building Society Fixed Rate Options Bond (Issue 87) 5 Year pays 3%, with a minimum deposit of £500
Virgin Money Fixed Rate 5 Year Bond pays 3%, with a minimum deposit of £1
FirstSave 5 Year Fixed Rate Bond pays 3.05%, with a minimum deposit of £1,000
Savers Should Consider Other Options
Tony Stenning, head of UK retail for BlackRock warns savers not to get complacent however.
"Headline inflation figures remain low and consequently many people underestimate the impact that inflation has had on their savings," he said.
"In fact, the effect of inflation today is similar to back in the Seventies. Headline rates were much higher then, but the differential between the inflation and interest rates is much the same now as it was back then."
Stenning urged the eight in 10 Britons who have cash savings to consider the detrimental effect that inflation is having on their hard earned nest eggs, and look to investments which have the potential for higher returns and income over the longer term.