Savers you've never had it so good?

gozomark wrote: »

CPI over the last 12 months was 3% - what did you earn on your savings in the last 12 months ? 5-6% ? - so you had a real return of 2-3%.

what will CPI be over the next 12 months ? 1-2%, and you can still fix at 3.5%, so a real return of about 2%

Indeed. Comparing last month's inflation figures with current savings rates is a pretty futile pursuit. You want to compare the savings you've enjoyed for the year up to last month to see what your real rate of return was (aside from which inflation rate to use).

And the savings rate you enjoy today - and the next 12 months - will only show its real rate when February 2010 inflation rate is released (March 2010).

Of course, you can look at the monthly change in the various rates:

http://www.statistics.gov.uk/instantfigures.asp

which were -0.7% from December 2008 to January 2009 for CPI and -1.3% for the same period for RPI.

So even if you had the proverbial cash under the mattress, your savings will have grown in real terms over that period. (Arguments about inflation rates aside...)

Paul_Herring wrote: »

The interest figures usually quoted aren't 'last month's' but a rolling average of the last 12 months.

So (e.g.) the 3.1% given for Dec '07 is the rate from Jan '07 to Dec '07. The 3.0% for this Jan is the rate from Feb '07 to Jan '08.

A 'monthly' figure would be more on the order of 0.25%.

I thought it was the January 2009 CPI figure (108.7) divided by the January 2008 CPI figure (105.5). Which is 1.0303... which is equivalent to 3.0% (to 1dp).

Paul_Herring wrote: »

This assumes that the CPI figures given are actually representative to the person looking at it. CPI is just an average unlikely to apply to most of the population.

thats correct, I'm assuming they are an average person, which is all I can do

Think I understand - I can spend my interest and not feel guilty; however those inflation figures from the stats website contain all kinds of stuff not relevant to me as a single, childless, car-less person - 1.5% weighting on education costs; petrol, etc?? (though I understand they affect Mr & Mrs Joe Avg and their 2.2 kiddlies)

Slightly off-topic - does anyone know how this is affecting student loans as the interest is supposedly the same as inflation? I know there was some contention as to which inflation measure they were using.

I am sorry but I don't buy this deflation arguement, RPI has been distorted by lower mortgage repayments due to stupidly low interest rates. Martin talks about the price of cars falling in the last posts, but we all know how the price of cars has been rising lately not falling! Vauxhall and Ford have raised prices partly due to the weak pound. The weak pound, which has been hammered by having such low rates is making all our goods increase in price because most of what we buy in this country is imported now.

So for most people RPI is not really useful, CPI is 3% but even that is not indicative of a lot of peoples real inflation rate as Martin admits himself. Petrol up too. Until I actually see a real decrease in inflation, I will not feel richer. My personal rate of inflation has hardly changed since RPI was 5%, yet we have crazy 2% savings rates. I don't see any sign of deflation, with Gordon printing money all I can fear is high inflation. The 15% VAT rate was another way that they have fudged the inflation figures and that will go back to 17.5% in less than a year taking prices back up with it.

So I can't really see the point of this articles headline as it is for many people, not the case.