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Inflation is gobbling up returns on savers' investments.
Consumers need to increase the amount they put into their savings accounts each month in order to keep up with rising inflation, it has been suggested. According to Abbey, rising prices will eat into savings returns unless consumers boost their contributions.
Figures from the Office for National Statistics show that consumer inflation is currently running at 5.2 percent - significantly above the Bank of England's two percent target. High energy and food prices have been blamed for much of the increase.
Abbey calculates that one in three UK savers need to top up their savings by an extra £78.60 a year in order to counter the cannibalising effect of inflation and earn any real interest on their investments.
Reza Attar-Zadeh, director of savings and investments at the bank, said: "While much attention has rightly focussed on savings accounts paying in excess of inflation, this ignores a core point - that savers should increase the amount they are saving to keep pace with inflation."
Figures released by Halifax recently show that since 2000, the value of savings held in individual savings accounts has increased seven-fold to reach £207 billion at the end of the 2007-08 tax year.
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