CHESTER, England, January 17, 2012 /PRNewswire/ --
- Basic rate taxpayers need a rate of 5.26 per cent to gain benefit in real terms, increasing to 7.01 per cent for higher rate taxpayers
Today's announcement by The Bank of England that inflation has fallen to 4.2 per cent, from 4.8 per cent in November, spells good news for beleaguered UK households who spent much of 2011 battling against rising prices, according to MoneySupermarket.com.
A recent MoneySupermarket.com poll of nearly 10,000 respondents found the main impact on consumers' personal finances in 2011 was high petrol prices (42 per cent), followed by rising bills (21 per cent) and debts (17 per cent). The recent announcement by the 'big six' energy providers that they are reducing the cost of gas and/or electricity by between 4.5 and 6 per cent will help households further but with most of these prices decreases not taking effect until February and March, the positive impact on inflation may not be seen until later this year.
In addition, UK savers will also be breathing a sigh of relief now inflation is starting to come down. To beat inflation, basic rate tax payers now need an account paying at least 5.26 per cent to gain benefit in real terms from their savings, increasing to 7.01 per cent for higher rate tax payers, and 8.41 per cent for 50 per cent tax payers.
Kevin Mountford, head of banking, at MoneySupermarket.com, said: "The rising cost of living has had a major impact on UK household budgets for the last 12 months and signs that this is beginning to reduce is very welcome indeed. However, despite inflation falling month on month, prices are still high. People still need to make sure they're not paying over the odds for major expenses like car and home insurance, energy and other household bills. Switching to the best deals using a price comparison website like MoneySupermarket.com could save over £1,000 for your family.
"High inflation combined with low interest rates has had a major impact on UK savers who have struggled to gain any real returns on their savings pots - a particular problem for those consumers who rely on their savings for income. Although the majority of savings accounts do not pay a rate to beat inflation, making sure your savings are working as hard as possible for you is vitally important. The top paying savings accounts currently offer rates over six times that of base rate so by choosing these you can reduce the impact inflation has on your pot."
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MoneySupermarket.com compares (at 22nd December 2011)
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