Savers have been battered by inflation for more than a decade, new figures have revealed. According to investment service Nutmeg.com the average cash ISA launched in each of the last 13 years would have failed to pay a positive rate of return. Inflation may have fallen to below the Government target of 2% - but this is the first time it has happened since November 2009.
Bank of England Base Rate has languished at 0.5% for five years next month, and with inflation topping 5% twice over the past 13 years that equals a sorry state for savers.
“With interest rates so low, it’s very difficult for banks to offer good rates to savers. And now we hear that, despite improving economic conditions, Bank of England Governor Mark Carney is changing the rules again and signalling low interest rates for even longer,” said Nick Hungerford, chief executive of Nutmeg.
Adrian Lowcock of stock broker Hargreaves Lansdown agreed saying that today’s lower inflation rate reinforced Mark Carney’s stance on interest rates.
“Carney’s new focus on closing the UK’s ‘output gap’ looks to be the correct policy – until the slack in the economy is taken up, inflationary pressures are likely to remain muted,” he said.
Income seekers keen to ensure they beat inflation in the future should maximise their stocks and shares ISA with high yielding assets – and for those who need the accessibility of cash there are options out there.
Now that inflation has fallen there are more than 65 cash ISAs on the market offering a real rate of return – you just have to be vigilant.
“There are always ISAs out there that can offer you some rate of return,” said Anna Bowes of SavingsChampion.co.uk. “It is simply a case of treating cash like an actively managed asset. You have to move your money around. Don’t let inertia cost you money.”