High inflation rates have depleted UK savings accounts by over £36 billion, new research has shown.
The analysis from accountants UHY Hacker Young, reveals that UK consumers have around £1.003 trillion deposited in savings and current accounts. However, around £110 billion is stored in accounts which pay no interest at all.
The average rate of return on savings is now 1.6 per cent, whilst inflation, measured by the Retail Price Index, was recorded at 5.2 per cent in April this year. Traditionally high-interest accounts, such as ISAs and fixed rate bonds, don’t seem to be faring much better either, with an average investment return of just 2.57 per cent.
As a result of these low rates, the real value of UK consumers’ savings fell by £36.5 billion in the last 12 months. The analysis also reveals that savings are being diminished when the Consumer Price Index is used. The CPI was measured at 4.25 per cent in April, reducing the value of savings by £29.42 billion.
Mark Giddens, partner at UHY Hacker Young, said, "The amount of money eroded away through inflation is staggering. In this climate of high inflation, savers need to be more proactive and shop around to get the best rates.”
He added, "Unfortunately for savers, the kinds of savings rates on offer from the biggest banks are unlikely to change any time soon."
