Inflation falls to 3.6% and a list of the inflation beating savings accounts

 The annual rate of Consumer Prices Index (CPI) inflation in the UK fell to 3.6% during January, down from 4.2% in December according to the Office for National Statistics (ONS).

Retail Prices Index (RPI) inflation - which includes mortgage interest payments - fell to 3.9% down from 4.8% in December.

The slowdown in the rise in food and energy prices were partly responsible for the monthly fall, however, the biggest contributor was the effect of last year's VAT hike falling out of the calculations.

However, despite the fall in inflation the CPI rate still remains well above the Bank of England target of 2%.

Good news for savers

Well the fall in inflation is welcome news for savers as before today there were only a few savings accounts offering interest rates in excess of inflation - and none beat inflation when taking into account the tax paid on that interest.

The fall in inflation means that basic rate savers need to secure a savings rate in excess of 4.5% per annum (gross) in order to maintain the spending power of their savings once tax has been deducted from their interest.

There are now a handful such accounts which I've listed below. Note: savers will have to lock up their savings for 5 years.

Savings accounts

(data from moneyfacts based on £1,000 lump sum)

Cash ISAs