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Image of Rachel Springall

Rachel Springall

Finance Expert & Press Officer
Published: 19/04/2023
Groceries in a shopping trolley

Despite the reprieve, food prices continue to rise at a significant pace.  

UK inflation, which is used to measure how prices increase, rose at a rate of 10.1% in the year to March, according to the Office for National Statistics (ONS). In comparison, inflation rose by 10.4% in the 12 months leading to February.

While inflation has fallen, it doesn’t mean the price of goods and services is getting cheaper. Instead it indicates that these prices are rising at a slower rate.

The fall in inflation was largely due to falling fuel prices. This month, the average petrol price stood at 146.8p per litre, down from the 160.2 p per litre seen in March last year.

In addition, the annual inflation rate for household services like water, electricity, and gas also fell slightly compared to February.

Grant Fitzner, Chief Economist at the ONS, said that rising food prices was the main reason why inflation remains elevated.

In particular, he noted that bread and cereal inflation are at a record high. Meanwhile, the annual rate of inflation for chocolate and hot beverages are now the highest on record.

What about core inflation?

Core inflation, which excludes food and energy prices, remained unchanged at 6.2% in the 12 months leading to March.

Economists and policymakers put some significance on this figure because food and energy prices can be volatile. Therefore core inflation can give them a broader indication of the trends in inflation.

What does this mean for your savings?

Savers may find it encouraging to see positive sentiment surrounding the top cash savings rates this month.

Whether consumers wish to keep their cash in a flexible easy access account or tie it up within a fixed account earning a higher guaranteed return, it's imperative they take some time to compare the latest deals.

Starting a new tax year has also seen the introduction of more activity within the ISA market, and both those looking for a new deal to invest for the 2023/2024 tax year, or perhaps transfer older ISA subscriptions, can find some attractive rates across the variable and fixed sectors.

As has been the case for a few years, consumers should compare both rates within and outside of an ISA-wrapper while considering both their Personal Savings Allowance (PSA) and ISA allowance. Signing up to newsletters and rate alerts is a great way to keep on top of the latest deals and compare the interest rates offered across all the different products.

The Bank of England base rate rises and competition among savings providers has led to higher returns over the past year and, compared to a year ago, savers get a return of almost 3% more on the top one-year fixed bond. While there are other longer-term interest rates to consider, there may well be a dividing sentiment among consumers and providers as to whether interest rates are destined to reduce in the months to come.

It will be interesting to see how the top rate deals fluctuate and how demand impacts the shelf life of the best deals over the next quarter.


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