Nation’s savings ‘may have lost as much as £113bn over past year in real terms’

As much as £113 billion could have been wiped off the value of the nation's savings over the past year in real terms, according to analysis by investment platform AJ Bell. This analysis comes after the Office for National Statistics revealed that the Consumer Prices Index dropped to 7.9% last month, down from 8.7% in May and the lowest rate since March 2022.

Laura Suter, head of personal finance at AJ Bell, expressed her concerns, stating: "Even though inflation has fallen today, savers are still being pummelled by high inflation and lower returns on savings. Although interest rates have risen considerably over the past year and a half, savers still lost money in real terms due to double-digit inflation for much of that period."

Suter further explained: "Over the past year, the average saver with £1,000 in an easy-access account will find it's now worth £938 in real terms, having received an average of 1.18% interest. The top-rate easy-access accounts would have paid more over that time, but nowhere near the current inflation rate of 7.9%."

Based on the £1.81 trillion held in savings accounts in the UK, it is estimated that the nation's savings could have collectively lost as much as £113 billion in real terms over the past year, assuming savings were earning the average easy-access rate and considering the current inflation rate.

Suter highlighted the issue of money being held in accounts earning little to no interest, saying: "Although some of that money will have been in fixed-rate accounts earning higher interest, a large proportion will also have been in accounts earning zero or minimal interest. We know that £250 billion of savers' money is sitting in accounts earning no interest, with that money alone losing £18