‘Savers left to sing the blues as their spending power disappears down the swanny’

The figures were published just days after savers were rocked by the withdrawal of National Savings & Investment’s inflation-linked certificates.

The certificates were hailed as a godsend for savers when they were relaunched in May, being the only cash-savings products guaranteed to offer a tax-free return above inflation.

The latest inflation hike leaves basic rate taxpayers looking for savings accounts offering 5.63 per cent a year if they have a chance of preventing their cash from being eroded by inflation.

Higher rate taxpayers need deposit accounts paying at least 7.5 per cent.

However, there are just five products on the market that enable basic rate taxpayers to counter the combined effects of tax and inflation, compared with 91 a year ago, according to Moneyfacts. All five are fixed-rate tax-free individual savings accounts (Isas).

However, all five require customers to leave their money tied up for a certain length of time, reducing their appeal for older savers in particular.

Sylvia Waycot, spokeswomen for Moneyfacts, said: “Inflation continues to whittle away any hope of a decent return on the nation’s savings.

“Without any hope of respite, all savers can do is sing the blues as they watch their spending power disappear down the swanny.”

A basic rate taxpayer who deposited £10,000 in a savings account paying the average rate five years ago has seen the value of their investment slashed to £9,345 because of inflation.

Campaigners have called on the government to respond to the latest inflation rise by doing more to help pensioners reliant on savings for their income.

Ros Altmann, director general of Saga, said the needs of over-50s were being ignored despite seeing their savings “shot to pieces”.

She believes a rise in the Isa limit for older savers would provide valuable breathing space.