Rachel Springall, Finance Expert at Moneyfacts.co.uk, said:

“An entire year has now passed since there were any standard savings accounts available on the market that could outpace inflation. In May 2021 (April CPI) inflation rose to 1.5%, surpassing every standard savings account that could outpace its eroding impact. Inflation is not showing any signs of getting back to target any time soon. Indeed, the Bank of England forecast for inflation is to hover around 6.6% during Q2 2023, which is far above the current 2% target. Savings rates are encouragingly on the rise and far superior to what could have been acquired a year ago, but inflation would still need to drop down considerably for savers to beat it today.

“Savers coming off a one-year fixed rate bond will be pleased to see the latest top rates for an equivalent term bond are much higher than a year ago, but also more than two years ago. The current top deal surpasses 2%, which was unheard of last year, as this could not even be acquired on a five-year fixed bond. The difference in rate between a fixed bond and fixed ISA remains but ISAs returns are creeping up, so it’s wise for savers to keep in mind their tax-free allowance. As it stands, savers would need to lock into a two-year fixed rate ISA to earn 2%, which may be too much of a commitment for some, particularly if savers expect rates will continue to climb in the weeks ahead.

“The back-to-back Bank of England base rate rises are positive for the savings market, but it is the challenger banks and mutuals who are fuelling the top rate tables with competition. As it stands, many of the biggest high-street banks have passed on very little to their easy access customers, so savers may need to rethink their loyalty and look elsewhere for a better return on their hard-earned cash. Keeping on top of the latest changes in the market is wise, especially as rate increases are prevalent as savings providers jostle market position.”

*Data note: Please note that these savings product numbers only include deals that are available to UK residents (easy access, notice, fixed rate bonds, variable or fixed ISAs) and exclude regular savers and children’s savers (this figure does not count each interest payment option for each account), based on a £10,000 deposit. Higher rates may be available for other levels of deposit.