Average Easy Access Saver Lost Nearly £500 in 2018
Inflation takes a smaller, but still severe, bite out of nest eggs compared with 2017
Average savers’ £26,403 nest egg would still have lost £494 due to inflation
2018 CPI came in at 2.1% this morning
The average saver using easy access accounts lost almost £500 in real terms during 2018 according to data released today, as inflation continued to eclipse rates, analysis by Gatehouse Bank shows**.
The average British saver saw marginally better instant access deposit rates last year. However the average savers’ £26,4032 nest egg would still have shrunk by £494 in real terms once inflation was factored in.
The CPI annual measure of inflation for 2018 was revealed to be 2.1% as official data was released this morning.
Savers relying on easy access accounts would have suffered a real terms loss of £19 on deposits of £1,000, £37 on savings of £2,000, £94 on a lump sum of £5,000 and £468 on £25,0003.
The modest change in fortunes for Britain’s embattled savers was mainly due to a much lower rate of inflation. CPI fell from 3% in 2017 to 2.1% last year.
Easy access accounts offered only 0.15% interest on average in 2017. This improved last year but only marginally, rising to 0.23% in 2018.
People keeping their money in cash would have been even worse off than those with savings accounts — but only just. Savers with the average nest egg kept in cash would have lost £39 more than those with easy access saving accounts, with an overall loss of £554.
The table below shows the profit and loss applying to cash and instant access savings in 2017 and 2018 once inflation is taken into account:
*CPI was an annual 2.1% in 2018, 3.0% in 2017.
Charles Haresnape, CEO of Gatehouse Bank, said:
“Savings rates are slowly creeping up but inflation is still taking a huge bite out of savings held in easy access accounts. Millions of savers will undoubtedly have found that in 2018 they received a substantial negative ‘real’ return on their hard-earned savings, when the impact of inflation is taken in to account.
“Those looking to drive a real increase in their savings need to be on the front foot in looking for better returns to prevent their nest eggs from shrinking. Many instant access savings rates are still at rock bottom and no one can afford to leave a significant amount of cash lying around for inflation to swoop on.
“There are many more accounts savers should consider, from fixed-term to notice accounts, which offer greater returns and won’t leave them as vulnerable to the impact of inflation, like easy access rates. Less well known providers often offer better returns and many, such as Gatehouse Bank, are members of the Financial Services Compensation Scheme, which protects deposits up to £85,000 per saver.”
**UK CPI
