Its bad news for local savers as the Office for National Statistics reported that the Retail Prices Index (RPI) unexpectedly surged last month to 1.6 per cent from 1.1 per cent in June. Another measure of inflation, the Consumer Prices Index likewise increased, jumping to 1 per cent in July from 0.6 per cent in June.
For Lytham St Anne’s residents who prefer to use local high street banks and building societies for their savings, this unexpected rise in inflation is bad news as their savings rates remain at a historic low. Indeed, there are currently no high street accounts or cash ISAs available for local savers which negate the effects of this inflation.
An Easy Access account at the local Marsden Building Society now pays just 0.10% in interest, whilst locking away your money for ninety five days pays 0.65%.
The Skipton Building Society Everyday Saver pays from 0.15% to 0.40% (to get the higher interest you have to have more that £50,000 stashed away). Their 45 day notice account pays 0.5%.
Savings with local banks fare even worse. Barclays and the Halifax paying a meagre 0.01% on their everyday savings. The soon to close local Trustee Savings Bank pays a paltry 0.02%.
All these accounts are much lower than inflation. By saving in these high street accounts, the true value of your capital decreases.
There seems very little incentive for people to save at the moment given the fact the rates on offer are so poor. This may be seen advantageous to encourage residents to spend and help the Covid-19 damaged economy to flow again. However, for the many Lytham St Anne’s pensioners who may be relying on their savings, this news provides very little future comfort for their on-going financial security. Likewise, younger residents, currently renting or still living at home, will find that saving for a deposit on their first home even more problematical.
Writer and broadcaster Martin Lewis points out that savers are suffering from an all-time, 325 year low in interest rates on savings accounts. He has told savers to check their accounts saying and to those with accounts paying a paltry 0.01% Martin advised, ‘Absolutely never keep money in a saving account that’s paying you such a poor rate just because of the sake of it. Ditch, switch and be aggressive, in a nice way, not aggressive for customer service staff. An aggressive saver should always be looking for the best rate.’ However, for older savers who are reluctant or unable to use on-line accounts, they seem to be stuck with rock-bottom high street accounts.