Savers may have to wait until early 2024 for the interest they receive to finally start beating inflation, based on the latest Bank of England projections.
Savings rates have been well below the CPI inflation rate for some time now, which means money held in accounts is losing value in real terms.
In fact, for 18 months, no account has managed to match or better inflation.
Inflation rose again to 11.1% in the 12 months to October, up from the 10.1% rise recorded in the 12 months to september.

When will savings beat inflation? The future is hard to predict, but the Bank of England’s forecast may give clues as to when the balance might change
Meanwhile, the best easy-to-access savings offer pays 2.81% and the best one-year solution pays 4.36%. Even the highest five-year interest rate yields 4.9%, a far cry from the current measure of inflation.
>> Check out the best fixed rate savings deals here
But the Bank of England says it expects inflation to fall sharply from the middle of next year, meaning the gap between savings interest and inflation could start to shrink.
The Bank says energy prices should now have less of an impact on inflation over the next six months, some commodity prices have also fallen, while evidence suggests bottlenecks affecting global supply chains are starting to fade.
Its monetary policy committee expects inflation to stay above double digits in the first months of next year before falling back.
He forecasts inflation to fall to around 5.2% by the end of next year and then to around 4% between January and March 2024.
Looking further ahead, he expects inflation to fall to around 2% in two years and 0.5% in three years as energy prices reverse and domestic pressures ease. .

Down: The Bank of England expects inflation to ease next year before finally falling below its 2% target – but what does this mean for savers?
What does this mean for savers?
If the Bank of England’s projections turn out to be broadly correct, savers will likely sigh in relief.
Over the past 18 months, even savers who have hidden their money in the highest paying savings accounts will have seen the value of that money gradually eaten away by inflation – although it is better to earn interest than to win none.
CPI inflation measures rising costs over the past 12 months, so October’s 11.1% inflation figure means typical prices for goods and services were 11.1% higher than they were in October last year.

Imbalance: CPI inflation has generally continued to rise since the beginning of last year. The last inflation-tracking savings rate ended in April 2021


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This means that what cost someone £1,000 in October last year will usually cost them £1,110 in October this year.
The best one-year fixed-rate savings offer at the beginning of October 2021 yielded 1.51%.
A saver who stashed £1,000 in this account a year ago will have earned £15 in interest, but would have needed £110 to match the rate of inflation.
So what does the situation look like for someone putting money into a savings account today?
To find out, someone hiding their money in the best one-year solution by paying 4.36% would have to figure out what inflation would be 12 months from now.
The Bank of England expects inflation to be around 5.2% in the same period next year. This means that a saver in the best fixed rate offer would be even worse off in real terms.
This means that something that costs £1,000 today would cost £1,052 12 months from now.
However, putting that same £1,000 into the best one-year fixed savings account would have only increased your savings to £1,043.
However, based on Bank of England projections, investing in a two-year savings rate today could be enough to beat inflation.
A saver with their money in the best two-year solution paying 4.75% will technically be worse off a year from now. However, between the last three months of next year and the last three months of 2024, inflation is expected to be at 1.4%.
This means that what £1,000 buys someone today will usually require £1,067 two years from now.
Someone with £1,000 in the best two-year fixed rate saver will earn £97 in interest so will be left with £1,097 at the end of the two-year period – beating the rate of inflation in the process.

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Someone who puts their money in a three-year fixed rate account paying 4.8% will do even better according to Bank of England projections.
The best three-year fix is currently paying 4.8% with Zopa Bank. The Bank of England expects inflation to fall to 0% in the last quarter of 2025.
This means that £1,000 today will effectively have the same purchasing power as £1,067 in about three years.
Someone who puts £1,000 into Zopa’s three-year solution paying 4.8% will end up with £1,151 at the end of the three-year period.
How reliable are the projections?
There is, however, a major caveat to all of this. The Bank of England’s projections are ultimately only projections. The evolution of the CPI over the next few years is difficult to predict with precision.
After all, the Bank of England has made the wrong predictions many times in the past.
This time last year, the Bank expected inflation to peak at around 5% in April 2022 before falling back – and that clearly has not been the case.
For those looking to fight inflation over the long term, investing is likely to prove the most effective remedy – even if there are ups and downs along the way.
According to a recent study by Janus Henderson, cash has only outperformed stocks in four of the past 20 years.
Those looking for the most profitable way to invest may want to consider online investment platforms, as most of them include the option to invest in an Isa.
When deciding which one to choose, it’s important to look at the service it offers, along with the administration and transaction fees, and any other additional costs.
This is Money has put together a comprehensive guide to the best and cheapest DIY investing platforms that might help you decide.
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