CPI rockets to 3.5%: the best inflation-beating savings accounts

Inflation jumped 0.9% last month, leaving many more savers at risk of losing money in real terms.

Inflation jumped sharply from 2.6% to 3.5% in April after a swathe of bill hikes kicked in.

Council Tax, energy, broadband and many other essential outlays all rocketed in price last month, helping push the CPI measure of inflation to a 15-month high and heap more pressure on household finances.

While the arrival of those bills was always going to drive up inflation, the increase was larger than many economists were expecting, leading some analysts to criticise the Bank of England's recent decision to cut the Base Rate of interest.

Reducing rates generally drives up inflation in the short term as people start saving less and spending more, making further increases to CPI more likely in the months ahead.

Nigel Green, CEO of deVere Group, said the Bank’s rate cut is looking “increasingly difficult to defend”.

He added: “Slashing rates just as inflation reignites sends conflicting signals and risks making conditions worse for the very households and businesses it’s trying to support.”

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Savers need to keep ahead of the curve

The sharp jump in inflation presents a big challenge to savers, as it means many more will be losing money in real terms.

Remember, inflation now stands at 3.5% and is expected to rise higher still over the Summer.

But the average instant access savings account rate is just 2.46%, according to comparison site Finder, while Cash ISA rates are lower still at 1.8% on average.

Research by Paragon Bank also suggests more than half a trillion pounds is sitting in accounts earning less than 1.5%.

Clearly, many savers need to move their money to more generous homes to stop their pots being eroded by inflation.

If you're among them, here are the best rates you can get right now.

Best fixed-rate savings accounts

If you’re looking to lock your money away for a shorter term, Tandem Bank pays the best rate on a one-year fix at 4.44%.

The account can also be opened with just a £1 deposit.

The best two-year fixed-rate bond is from Secure Trust Bank (min. deposit £1,000) and pays 4.42%.

Looking for a long-term home for your savings? The best five-year fix on the market right now is from Birmingham Bank and pays 4.43%.

It does require a fairly sizeable minimum deposit of £5,000, however, so it might not be suitable for everyone.

For those with a smaller pot, JN Bank pays a marginally lower rate of 4.4% on its five-year fix, but it can be opened from just £100.

Best notice accounts

Investec has the best notice account on the market, with its 90-Day Notice Saver Issue 4 paying 4.64%.

If 90 days is too long to wait to access your money, Investec also has a 32 Day Notice Account paying 4.5% (available through savings platform Raisin)

Best access accounts

If you want instant access to your funds, Chip’s savings account pays a generous 4.77% and can be opened from just £1.

However, it only allows three withdrawals a year.

If you need more regular access to your cash, the Family Building Society Online Saver offers unlimited withdrawals and comes with a rate of 4.55%.

Best tax-free accounts

For those looking to shield their returns from the taxman, the top Cash ISAs are particularly generous at the moment: Chip’s Cash ISA currently offers a 4.96% on deposits from £1, just beating Plum’s Cash ISA rate of 4.95% (min £100).