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Savers lose out as inflation rises

Consumer Price Inflation (CPI) rose to 3.4 percent in March, higher than the predicted increase and the Government-set target of 2 percent.

This rise in CPI, coupled with low interest rates on many accounts, is likely to send the real value of many people’s savings plummeting further, making it one of the worst times to save.

Based on a £10,000 savings deposit, once inflation and tax are taken into account, savers would be down by over £200 a year.

To avoid losing money, basic rate taxpayers should look for an account paying 4.25 percent, giving them a choice of 44 accounts. Those on the higher tax rate have just four accounts to pick from to achieve their break even 5.64 percent.

The Consumer Price Index, the Government’s preferred inflation measure, also reached 3.4 percent in March, driven by higher gas, petrol and food prices.

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