Inflation Rate Even More Bad News for Savers
People interested in putting money away for a rainiy day have already been beaten about a lot during the recession. With interest rates at record lows meaning that making any money from savings has become a thing of the past and encouraged many people to start spending more. However, there are more than just low interest rates for savers to worry about now, as inflation spikes can also make it worse for the thriftier amongst us.
The higher levels of inflation will mean that that the value of money in savers accounts will be lowered while the low interest rate is doing nothing to compensate. Some industry experts have suggested to consumers that they use the money to pay off debts or shift the money into the stock market instead. However, people with serious savings are unlikely to be the same people that are seriously in debt, while the stock market represents a significant risk in some cases.
The Bank of England noted that inflation will likely rise as high as per cent in the next few weeks but then quickly sink down below the 2 per cent inflation target.
Recent research has suggested that most of the best savings accounts have already been pulled. Kevin Mountford from Money Supermarket said:
?This sudden fall in savings rates will have caught many by surprise, and coupled with December’s unexpectedly sharp rise in inflation means 2010 looks like it may be a difficult year for savers.?
Of course, low interest rates do mean that mortgages are costing people significantly less and those looking to get a new mortgage can find some very good deals right now.? The average inflation rate for a tracker deal with a deposit of 25 per cent is now 3.63 per cent, the lowest that has ever been noted since records began in 1997.