Inflation rose to 0.7% in October 2020, according to the latest figures from the Office for National Statistics (ONS) - partly due to clothing and footwear prices, as well as the cost of food and non-alcoholic drinks.
The Consumer Prices Index (CPI) measure of inflation is up from 0.5% in September.
Here, Which? reveals why inflation has risen, and where you can find the top-rate savings accounts and cash Isas.
The main factors behind October's inflation rise are clothing and footwear prices, which saw higher increases between September and October this year than at the same time in 2019.
Some food and non-alcoholic drinks prices also rose - particularly fruit and vegetables, and the price of second-hand cars also made a contribution to the inflation change.
These price increases were offset by prices falling across recreation and culture - particularly package holidays - as well as petrol and diesel prices, and transport services such as coach fares.
The graph below shows how CPI inflation has varied since January 2017, using figures from the ONS.
The Bank of England has been tasked with keeping inflation as close to 2% as possible. However, it's measured below this target since August 2019, and has been at 1% or less since April 2020 due to the economic effects of the .
The table below sets out the top rates for fixed-rate and instant-access cash Isas and savings accounts, by order of term.
|Account type||Account||AER||Terms||Does this account beat or equal October inflation?|
|Five-year fixed-term savings account||Bank of London & The Middle East Five-Year Premier Deposit Account||1.5% (EPR*)||£1,000 minimum initial deposit||Yes|
|Five-year fixed-term cash Isa||Punjab National Bank Five-Year Fixed-Rate Cash Isa||1.2%||£1,000 minimum initial deposit||Yes|
|Four-year fixed-term savings account||Punjab National Bank Four-Year Fixed-Term Deposit||1.3%||£100 minimum initial deposit||Yes|
|Four-year fixed-term cash Isa||Punjab National Bank Four-Year Fixed-Rate Cash Isa||1.1%||£1,000 minimum initial deposit||Yes|
|Three-year fixed-term savings account||Al Rayan Bank 36-Month Fixed-Term Deposit||1.41% (EPR*)||£5,000 minimum initial deposit||Yes|
|Three-year fixed-term cash Isa||Punjab National Bank Three-Year Fixed-Rate Cash Isa||1%||£1,000 minimum initial deposit||Yes|
|Two-year fixed-term savings account||Al Rayan Bank 24-Month Fixed-Term Deposit||1.25% (EPR*)||£5,000 minimum initial deposit||Yes|
*Expected profit rate.
**Rate will drop from 24 November. Income Bonds will pay 0.01% AER and Direct Isa will pay 0.1% AER.
Source: Moneyfacts. Rates correct as of 17 November 2020, but are subject to change.
This month all of the top-rate accounts are equal to or exceed the rate of inflation for October.
Only three of the accounts listed here will accept a minimum initial deposit of less than £1,000, which may prove difficult for those with smaller amounts to save.
A previous study had found that the savings market was not working effectively for some customers - particularly those who were longstanding customers with the same provider and had instant-access accounts with them. In this case, these customers were often receiving lower interest rates than those who opened new accounts.
In theory, the introduction of a SEAR would mean savings rates were maintained at a certain level, and if customers were able to compare different providers' SEARs then it would be easier to understand which account was 'best'.
However, due to rates of interest now being so low for both new and existing customers alike, the FCA recently announced it was shelving these plans. They may be revisited in future if rates start to rise once more.
According to data from Moneyfacts, the average rate for a one-year fixed-rate bond has fallen to just 0.61% AER, down from 1.28% in November 2019.
Before this, the record low for the average one-year fix rate was 0.63%, but increased competition in September had seen this rise slightly.
The graph below shows how average one-year fixed bond rates have changed over the past year.
With this in mind, it might be worth looking to fixed accounts with longer terms to get a more competitive rate.
CPI inflation tracks the costs of a 'shopping basket' containing around 700 popular goods and services - from airfares to avocados.
The figure that's released each month shows how much prices have changed in comparison with the same month the year before.
So, if you'd bought all of the items in the basket in October 2019, and bought them all again in October 2020, your second shopping trip would have been 0.7% more expensive.
Over time, these price changes can affect the buying power of money held in savings accounts. If the cash isn't growing in interest at the same rate as inflation or more, it will effectively lose value, as you'll be able to buy less with it.
That's why it's important to make sure your money is making as competitive a return as possible - even when rates are falling.
You can search through hundreds of savings accounts and cash Isas with Which? Money Compare.
The comparison site details the interest rate and terms of an account, as well as how it rated in our unique savings survey.
It also lists the accounts that have been named a Which? Recommended Provider. Which? Recommended Providers are companies that have both been rated highly by customers and offer products that meet the exacting standards of our expert researchers.
Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Money Compare is a trading name of Which? Financial Services Limited.