The consumer price index rose sharply to 2.9 per cent, spiralling above the Government's target of 2 per cent for the first time since May.

Savings rates look to have hit rock bottom, with the average no-notice rate hovering at 0.75 per cent, not far above bank base rate.

A basic rate taxpayer currently needs to find a savings account that pays at least 3.63 per cent in interest to stop their savings pot eroding away. A higher rate taxpayer needs to locate an account that pays 4.81 per cent.

Currently, there are no variable rate accounts paying interest above 3.63 per cent.

The recent published inflation figures shows that the real return after basic tax and inflation on an average no notice savings account is at a worrying -2.30 per cent, the lowest since February last year.

Darren Cook, spokesman for Moneyfacts.co.uk, said, ‘Inflation is starting to make its unwelcome mark on people's spending power and with savings interest rates stuck at their historical low, there is little that savers can do to fight back.’

Pensioners who may rely on their savings pot to subsidise their pension are seeing their savings being eroded on average by 2.30 per cent per year for a basic rate taxpayer and 2.45 per cent for a higher rate taxpayer.

Cook added, ‘This is extremely unfair for those savers who have made prudent or astute decisions in the past and are being hit by low savings rates and spiralling inflation.

‘Now that the rate of inflation is well above target, this must surely have an impact on how long bank base rate will stay at 0.5per cent.’