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UK savings eroded by £36 billion

The value of savings across Britain has been eroded by £36 billion as a result of increased inflation, research has shown.

Approximately £110 billion of this is contained in accounts which pay zero interest, it said.

The results show that savers may want to consider alternative places to invest their money in future.

Overall, the average return people are getting on their money is just 1.6 per cent, well down on inflation as measured by the Retail Prices Index, which was running at 5.2 per cent in April, the latest month for which figures are available.

Even accounts that have traditionally paid higher returns, such as tax-free ISAs and fixed rate bonds, are currently only paying average interest of 2.57 per cent.

As a result, Britons have collectively seen the real value of their savings drop by £36.45 billion during the past year, once interest of £15.75 billion is taken into account.

People's savings are also being diminished by inflation if the Consumer Prices Index (CPI) measure is used, with this running at 4.5 per cent in April, slashing the buying power of people's deposits by £29.42 billion.

Copyright Press Association 2011

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