Enables’ IFAs recently noted that may on furlough have been saving money recently but despite inflation falling to a four-year low of 0.5% during May 2020, savers are still struggling to find attractive savings deals as providers continue to reduce their rates. Finding the right place for your savings is a continual process that has to be regularly reviewed ideally with an experienced financial advisor.
The figure of 0.5% recorded in May is the lowest inflation has been since June 2016. This figure reflects the unusual times we are in. “The impact of the UK lockdown in response to the Coronavirus pandemic has without a doubt influenced inflation. Consumers are adjusting to a change in spending behaviours and are perhaps saving their disposable income amid economic uncertainties, despite a drop in the cost of goods and services. Those consumers who have decided to spend less and save more though will find that interest rates on savings accounts are plummeting.” Said Rachel Springall, finance expert at Moneyfacts.co.uk
The main reason for the fall in inflexion can be linked to the falling of petrol costs, clothing and footwear prices. In the immediate term according to Money Facts UK, 491 savings accounts can match or beat inflation. But unfortunately, many providers are continuing to cut savings rates, so if inflation does rise in the upcoming months, savers may quickly find that they are struggling to find an inflation matching let alone an inflation-beating account.“The savings landscape is almost unrecognisable to a year ago, where savers could find a one-year fixed bond offering 2.20% as an expected profit rate with Bank of London and The Middle East (BLME), but the same provider now pays 1.00%, some 1.20% less….” added Springall.
As ever it may be time for savers to react quickly to have a chance to acquire the top savings rates. Switching may well become a more frequent occurrence. Enable’s IFAs of Bishops Stortford can try and help you find the right place for any of your savings for the longer term.