Few savers able to beat cost of living

JUST 12 savings accounts give basic rate taxpayers a return that outstrips both tax and rising prices, despite the surprise inflation fall last month.

It was revealed yesterday that the consumer prices index measure of inflation fell from 4.5 to 4.2 per cent in June. Savers paying basic rate tax need an account paying 5.25 per cent a year to beat the effects of inflation and tax, while higher rate taxpayers need at least 7 per cent. Of the 12 accounts helping basic rate taxpayers negate inflation, ten are fixed rate tax-free Isas, said Moneyfacts. The effect of inflation means a basic rate taxpayer who paid 10,000 into the average savings account five years ago would now have just 9,402 to show for it.