Inflation remained at 2% in June 2019, according to figures released this morning from the Office for National Statistics (ONS), mainly due to price reductions across motor fuels, accommodation services, electricity and gas.
These drops, however, were offset by the cost of clothing and food.
CPI inflation also measure 2% in May, down from 2.1% in April 2019.
Here, we explain why the inflation rate has changed, and where to find savings and cash Isa accounts that can beat it.
To beat the current rate of inflation, you'd need to lock your money away for at least one year in a fixed-rate savings account, or four years in a fixed-rate cash Isa.
|Five-year fixed-rate savings account||Bank of London & The Middle East five-year premier deposit account||2.8% (EPR*)||£1,000 minimum initial deposit.|
|Five-year fixed-rate cash Isa||Newcastle Building Society five-year fixed-rate cash Isa||2.12%||£500 minimum initial deposit.|
|Four-year fixed-rate savings account||Bank of London & The Middle East four-year premier deposit account||2.65% (EPR*)||£1,000 minimum initial deposit.|
|Four-year fixed-rate cash Isa||United Trust Bank cash Isa four-year bond||2%||£15,000 minimum initial deposit.|
|Three-year fixed-rate savings account||Bank of London & The Middles East three-year premier deposit account||2.6% (EPR*)||£1,000 minimum initial deposit.|
|Three-year fixed-rate cash Isa||Charter Savings Bank three-year fixed-rate cash Isa||1.87%||£5,000 minimum initial deposit.|
|Two-year fixed-rate savings account||Bank of London & The Middle East two-year premier deposit account||2.45% (EPR*)||£1,000 minimum initial deposit.|
*Expected Profit Rate. Source: Which? Money Compare. Correct 17 July 2019.
Since upping its savings rates last week, Bank of London & The Middle East currently offers the top account for every fixed-rate term.
All of its accounts require a minimum initial deposit of at least £1,000, and there are no options for later additions or early withdrawals, so you make sure you can afford to commit to the whole term.
As Bank of London & The Middle East is an Islamic bank, it pays an 'Expected Profit Rate' (EPR) rather than a rate of interest (AER). This is the profit the bank expects to share with its account holders, and therefore there is a small chance that the rate you receive will be different to the one advertised - though this has not previously happened with BLME.
Raising rates goes against the current trend, as many banks are dialling back their offers. According to Moneyfacts, the average rates for bonds lasting more than 18 months dropped from 1.86% in September 2018 to to 1.78% this month.
While cash Isas rates aren't as high as savings accounts, they do have the added benefit of being tax-free - a perk that could be beneficial in the long run.
Any interest you earn within a cash Isa is completely tax-free, which isn't the case with savings accounts.
Thanks to the , many people won't have to worry about paying tax on their savings. Basic-rate taxpayers can earn up to £1,000 savings interest a year tax-free, while higher-rate taxpayers can only earn up to £500.
Those with larger sums in savings could still find themselves with a tax bill, especially with the effect of savings compounding over time. And those paying additional-rate tax do not receive a personal savings allowance at all.
The main reason prices are rising less quickly are drops in the cost of services, such as overnight hotel accommodation and motor fuels. This was balanced out by clothing and footwear, food and non-alcoholic beverages, which all saw much bigger price drops this time last year.
The graph below shows how CPI inflation has changed since 2013, with figures sourced from the ONS.
The Bank of England aims to keep inflation as close to 2% as possible, with the rate so far hovering close to this benchmark throughout 2019.
Inflation last peaked at 3.1% in November 2017, when no savings accounts could beat it.
While the situation is much better for savers now, it's not quite as good as January, when CPI inflation hit a two-year low of just 1.8%. At that time, the rate could be beaten by more than 300 savings and cash Isa accounts.
CPI inflation tracks the prices of around 700 popular goods and services, held in an imaginary shopping basket.
The figure that's released each month shows how the price of everything in the basket has changed. So, if you had bought all of the goods and services in June this year, you'd have paid 2% more than in June 2018.
This affects the buying power of your savings. If your interest rate doesn't equal or exceed the rate of inflation, your savings will effectively lose value over time, as you'll be able to buy fewer things with the same amount.
That's why it's important to make sure your cash is held in an account that beats inflation.
Which? Recommended Providers are companies that have been rated highly by the respondents to our unique customer survey and have products that meet the standards of our researchers.
If you want the flexibility to make withdrawals whenever you like, there's the Kent Reliance easy access account. It pays 1.3% AER and requires a minimum initial deposit of £1,000. Customers scored its interest rate information highly.
Alternatively, the Leeds Building Society limited issue online access Isa pays 1.4% AER, and you can open it with just £1. The provider scored highly for customer service.
If you don't mind locking up your savings, you could earn 1.25% AER with the Skipton Building Society one-year fixed-rate cash Isa. The minimum initial deposit required is £500, and customers rated its clarity of statement and customer service.
For longer-term savings, the Nationwide five-year fixed-rate bond pays 1.6% AER, and you'll only need £1 to open it. This provider also scored well on its customer service and clarity of statement.