To maintain the purchasing power of their savings in light of the Consumer Price Index rising to 3.7pc, a basic-rate taxpayer needs to find a savings account paying 4.63pc a year, while anyone paying the higher tax rate of 40pc needs to find an account paying 6.17pc.
Out of 2,203 savings products on the market, there are 22 accounts – 19 Isas and three fixed-rate bonds – that outpace inflation after allowing for basic-rate tax. There are no non-Isa accounts that do this for 40pc taxpayers.
Savers hardest hit by the rise in inflation are those who rely on their savings to supplement their income, many of whom are pensioners. Basic-rate taxpayers receiving the average rate of interest on an instant-access account are in effect seeing their savings eroded at the rate of 3.06 a year.
Nineteen Isas pay at least 3.7pc, allowing all savers to beat inflation, irrespective of their rate of tax. However, all but one are fixed-rate Isas requiring savers to commit funds for four or five years – too long a commitment for most savers. The other option is the Santander Super Flexible Isa, but you have to buy another investment product at the same time.
The three bonds available to basic-rate tax payers are the Combination Bonds from Yorkshire and Barnsley building societies, which pay 6pc but require you to take out a longer-term investment product at the same time, and Coventry Building Society's five-year bond paying 4.75pc.
Darren Cook of Moneyfacts said: "That stealthy enemy called inflation is quietly but aggressively eroding away the spending power of a saver's hard-earned nest egg.
"The average instant-access savings rate is still at rock bottom at 0.83pc. The only trigger for any improvement in savings rates may be a surprise increase in the Bank of England's base rate, but this is not likely to happen soon despite the increase in the rate of inflation.
"To just break even, higher-rate taxpayers need to find an account paying 6.17pc, a level that is nigh on impossible to achieve. It is difficult for savers. At best they should try to stay within arm's length of inflation and try to weather the storm of low rates and high inflation."
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