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Listen nowInflation stays at 2% in June 2024: which savings accounts beat it?
A drop in clothes and food costs helped offset soaring hotel prices to keep the CPI figure steady
Inflation remained at 2% in June 2024, according to data from the Office for National Statistics (ONS). It means the Consumer Price Index (CPI) figure has met the Bank of England's target rate for two months in a row.
Sticky inflation, however, doesn't mean prices are going down; it just means they're rising at a slower rate than before.
Here, Which? explains why the inflation rate has remained flat, and which savings accounts and cash Isas can help you beat it. We also share our advice for keeping costs down.
What's happening to inflation?
The ONS says a drop in the price of clothing and footwear had the biggest downward effect on inflation. Prices for these items rose by 1.6% in the 12 months to June 2024, compared with a 3% year-on-year rise in May.
Food and drink inflation has also dropped sharply, with prices rising by 1.5% in the 12 months to June 2024, down from the 1.7% yearly increase seen the previous month. The June figure is the lowest annual rate since October 2021, when it was 1.3%, and represents a huge drop compared to this time last year when prices were rising by an eye-watering 17.4%.
Falling costs for these goods were offset by a surge in hotel prices, however, which saw a monthly rise of 8.8% – up significantly from the 1.7% rate seen in June 2023. In contrast, prices in restaurants and cafés went up by 0.3% on a monthly basis.
The ONS data shows the costs of package holidays, cinemas, theatres and concerts were also rising.
The graph shows how inflation has changed since August 2020:
The Bank of England’s target is to keep inflation as close to 2% as it can and that target has now been met for the second consecutive month.
Inflation hasn’t been this low since July 2021 but before that it was even lower – hitting a rock-bottom figure of 0.2% in August 2020 due to the impact of the pandemic.
How many savings deals beat CPI inflation?
Savers looking for an inflation-busting deal can now take their pick, with the latest Moneyfacts data showing 1,638 products now offer rates higher than 2%. That's up slightly from 1,622 last month and includes easy access, notice accounts, variable-rate deals, fixed-rate bonds and Isas.
This table shows the top rates for fixed-term and instant-access cash Isas and savings accounts, ordered by term.
| Account type | Account | AER/EPR | Terms |
|---|---|---|---|
| Five-year fixed-term savings account | Birmingham Bank 5-Year Fixed Rate Bond | 4.61% | £5,000 minimum deposit |
| Five-year fixed-term cash Isa | Principality Building Society 5-Year Fixed Rate Cash Isa | 4.25% | £500 minimum deposit |
| Four-year fixed-term savings account | United Trust Bank 4-Year Bond | 4.35% | £5,000 minimum deposit |
| Four-year fixed-term cash Isa | United Trust Bank Cash Isa 4-Year Bond | 4.1% | £5,000 minimum deposit |
| Three-year fixed-term savings account | Hodge Bank 3-Year Fixed Rate Bond | 4.81% | £1,000 minimum deposit |
| Three-year fixed-term cash Isa | Principality Building Society 3-Year Fixed Rate Cash Isa | 4.6% | £500 minimum deposit |
| Two-year fixed-term savings account | Close Brothers Savings 2-Year Fixed Rate Bond | 5.06% | £10,000 minimum deposit |
Source: Moneyfacts. Correct as of 17 July 2024 but rates are subject to change.
It's important to choose an account with a rate higher than the current CPI figure because if interest isn't at the same rate of inflation or more, your nest egg will effectively lose value over time.
If we look back to July 2023, when the June CPI measure stood at 7.9%, there were no deals that could beat inflation.
Now all the top interest deals listed in our table are more than double the current rate at which prices are increasing. The best deals currently on the market are offered by smaller, challenger banks, with the highest rates on short-term fixed bonds or instant-access accounts.
Choice of savings product is also booming, with Moneyfacts data showing there are now 2,014 available deals (including Isas) – the highest count since May 2012, when there were 2,020 accounts on the market.
The number of cash Isas in particular has surged, with 571 deals to choose from in July 2024 – the most recorded since Moneyfacts started collecting this data in February 2007.
There has also been a rise in the number of providers. There are now 144, compared to 116 in May 2012 – that's a 24% increase and the highest ever recorded by Moneyfacts.
- Find out more: best savings accounts
How to cut costs when prices are still high
Hotel costs are soaring, so if you're taking a holiday this summer and staying in the UK, it's more important than ever to shop around for accommodation. Our guide on the best UK hotel chains – and the ones to avoid – can help you make the right choice.
If you're looking for a well-rated but low-cost hotel, we've also got that covered in our guide to the best stays for under £100 – as rated by Which? Travel’s undercover team of inspectors.
And while inflation on clothes and food may be easing, the price of many goods is still high.
We have lots of advice to help you find the right store to do your shopping and also cut costs on your groceries. Plus, our monthly analysis reveals which is the cheapest supermarket for big and small trolleys of groceries.
