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Inflation rises to 2.3% in October – how many savings accounts offer higher rates?
Energy costs push inflation above Bank of England's 2% target
High household energy bills helped push inflation up to 2.3% in October, Office for National Statistics (ONS) data shows.
This is a sharp rise on the 1.7% recorded in September, and means the Consumer Prices Index (CPI) figure is now back above the Bank of England's target of 2%.
Despite the rise, there are still plenty of inflation-beating savings deals to choose from. Read on to find out which accounts offer the best returns on your money.
The best inflation-beating savings accounts
Savings rates are steadily falling and inflation edging higher, but the majority of accounts still beat October's figure of 2.3%.
Our analysis of Moneyfacts data shows that 1,997 savings accounts (91% of all products) offer rates above inflation. That includes instant-access, variable-rate deals, fixed-rate bonds and Isas.
This overall figure is down 5% on last month. The number of fixed-rate accounts with rates above inflation fell from 99% to 91%, while variable-rate accounts decreased from 89% to 84%.
Despite the drop, the picture still looks better than this time last year. In November 2023, less than half of saving deals beat October's CPI figure of 4.6%.
This table shows the top rates currently available on fixed-term and instant-access cash Isas and savings accounts, ordered by term.
| Instant access | Cahoot (a) | 5% | 61 | £1 | Internet | Monthly, yearly |
| Instant access Isa | Trading 212 | 5.17% | n/a | £0 | Internet, mobile app | Daily |
| One-year fixed rate | Ahli United Bank (UK) plc (s) | 4.8% | n/a | £1,000 | Internet, mobile app | On maturity |
| One-year fixed rate Isa | Castle Trust Bank | 4.49% | n/a | £1,000 | Internet, mobile app | On maturity |
| Two-year fixed rate | Bank of Ceylon (UK) | 4.52% | n/a | £5,000 | Internet, mobile app | On maturity (compounded annually) |
| Two-year fixed rate Isa | Secure Trust Bank | 4.36% | n/a | £1,000 | Internet | Yearly |
| Three-year fixed rate | Al Rayan Bank (s) | 4.6% | n/a | £1,000 | Internet, mobile app | On maturity (compounded annually) |
Table notes: rates sourced from Moneyfacts on 20 November 2024 and based on a balance of £1,000. Provider customer score is based on savers' overall satisfaction with the brand and how likely they are to recommend it to others. n/a means sample size was too small for us to generate a provider score (a) 5% interest on balances up to £3,000. (s) This is a Sharia-compliant product, and so offers an expected profit rate (EPR) as opposed to an annual equivalent rate (AER)
How savings track against inflation
It's important to choose an account with a rate higher than the current CPI figure, because if the interest rate on your account is below inflation, your savings will effectively lose value over time.
This table shows how average savings rates compare to inflation since August 2020, using data from Moneyfacts:
As you can see, average rates on one-year and longer-term bonds have beaten inflation since October 2023, with average instant-access rates not rising above inflation until April 2024.
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What's happening to savings rates?
Rates on fixed-term savings accounts have been steadily dropping for a year, but the Bank of England's decision to start cutting the base rate in the summer sparked falling rates on instant-access deals too.
One in five instant-access accounts dropped their rates or were withdrawn in the week following the latest base rate cut on 7 November. Rates on these accounts are variable and are usually the first to be cut by banks responding to base rate changes.
Savers looking for a top rate of 5% AER or more will now be limited to instant-access savings accounts and Isas.
We are likely to see rates fall further as providers continue to make reductions in response to the changing market, so if you're shopping around for a new account, time may be of the essence.
- Find out more: best savings accounts 2024
Why is inflation rising again?
The biggest driver behind October's inflation rise was an increase in energy prices, ONS figures show.
In October, electricity prices rose by 7.7% and gas prices by 11.7%. This is down to the new energy price cap, which increased by 10% on 1 October and added £149 to annual fuel bills for the average household.
Price rises in other sectors also helped push inflation up in October. For example, airfares jumped by 6.3%, the highest rise in October since ONS records began in 2001, and hotel prices jumped by 4.3%.
Food price inflation remained largely unchanged from September, but alcohol and tobacco prices rose by 5.2% year-on-year.
