In June, the Bank of England (BoE) decided to raise the base rate for the thirteenth consecutive time to five per cent.

A higher base rate has been introduced to combat inflation, which has recently fallen to 8.7 per cent but remains stubbornly higher than previous predictions.

This rate of inflation is well above the BoE’s two per cent target for inflation and so further action by the Bank’s Monetary Policy Committee (MPC) is expected in future months unless something significant changes.

Whilst many of the headlines have focused on the likely impact on those with debts, particularly mortgage holders with variable rates or who are likely to come to the end of a fixed-rate deal, less focus has been given to savers.

As the base rate rises, it is expected that banks and building societies will increase the rates on savings accounts. However, how much is really what matters to many savers.

How are the banks changing?

If we look at the latest data from Moneyfacts, from the start of the year, the average easy-access savings rate has increased by 0.78 percentage points from 1.56 per cent to 2.34 per cent. In this period, the BoE increased the base rate by 3.5 per cent.

Similarly, Moneyfacts shows that one-year fixed rate deals have increased by 0.93 percentage points on average – from 3.56 per cent to 4.49 per cent.

These rates still aren’t keeping pace with inflation, or the recent rate rises, but this could be about to change.

For example, some banks predicted the latest MPC decision and increased their savings rates ahead of the announcement.

Since then, many other saving providers have adjusted their rates, but many prominent banks aren’t passing the full interest rate increases on to their customers – especially on standard easy-access deals. Many of these forms of account still have interest rates of around one per cent.

Savers should be aware that there is no guarantee that your bank or savings provider will increase their rates in response to the base rate rise.

Therefore, the recommended course of action is straightforward – take a proactive approach in seeking out the most competitive rates available.

What might the future hold?

Currently, analysts expect the rate of inflation to continue to fall into the new year, with forecast rates of between four to five per cent.

In fact, it is not until 2025 that the rate of inflation is likely to drop below the BoE target rate of two per cent.

In response, the BoE is expected to continue increasing the base rate – with estimates suggesting that it will peak at around six per cent.

It should be noted that these are only predictions and there are many external factors, including the ongoing war in Ukraine, which could cause global prices and inflation to spike once again.

What should savers do?

Having a pot of savings is still one of the best means of providing financial security for yourself and your family due to the regulatory protections offered on accounts.

Whilst some savers are taking money out of accounts due to savings falling behind the rate of inflation, there are ways of incorporating savings into your wider wealth plan to ensure you remain financially prosperous.

However, to get the most out of your savings it is important to review them regularly with professional advice to ensure that they are the most suitable product or account.