Savings are set to suffer even more after Inflation rose more than expected In April hitting a 17-month high.

The Office for National Statistics said consumer prices rose to 3.7pc last month compared to the expected 3.5 per cent. Inflation was well above the government’s 2 per cent target in March at 3.4 per cent.

The Bank of England will now have to write to the new Chancellor, George Osborne, explaining why inflation is still more than 1 percentage point above the government’s target.

The rise is thought to have been driven by big rises in tax on alcohol and tobacco, as well as women’s clothing and food prices.

Struggling savers will now find it even more difficult to see a return on their investments.

According to moneysupermarket.com, £206 will have been wiped off the value of £30,000 savings in the last five months and basic rate taxpayers now need a to find an account paying 4.63 per cent, while higher rate taxpayers need an account paying 6.17 per cent to break even.

Kevin Mountford, head of banking at moneysupermarket.com, said: “There’s no denying that current inflation figures and low interest rates are having huge impact on customers’ savings. There is a danger that many will do nothing because of the belief that there is little point, but this is not the time to be apathetic.

“Yes, it’s getting harder to earn a positive return on your savings, but rather than sitting back and doing nothing, it is more important than ever for savers to proactively seek the best returns possible on their money.”

He has urged savers to use their tax free ISA allowances, which increased last month to £5,100 for cash savings in order to offset some of the affects of inflation.

© Fair Investment Company Ltd