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UK inflation falls to 3%

The Office for National Statistics has today announced a 0.1% fall in inflation for the month of January with the rate now down to 3%. While the fall in inflation is welcomed across the board many had expected the rate to drop as low as 2.7% and there is some disappointment in the marketplace. However, the Bank of England is firm in its belief that the UK rate of inflation is set to fall dramatically over the coming months as the financial crisis in UK continues to kick in and consumers struggle to cover the cost of living.



While in theory a fall in the rate of inflation is of assistance to UK savers, with their real rate of return increasing, in reality there is very little improvement in their current situation. As saving rates continued to fall many savers are struggling to cover their everyday costs and "nest eggs" and now being used whereas just 12 months ago many were able to live off their interest.



Each and every announcement from the government and the Bank of England seems to indicate that base rates in the UK are set to fall substantially further in the weeks and months ahead. Beleaguered savers are set to see their deposits reduced yet further so a small rise in the "spending power" of their savings is fairly irrelevant compared against the wider economic picture.

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