Savers figure hits 16-month high

(Reuters)

The number of people who are saving reached a 16-month high during January as consumers made New Year's resolutions to improve their finances, research showed today.

Around 79% of people said they were now setting aside money either on a regular basis or occasionally, the highest level since September 2008, according to Nationwide.

The proportion of people who do not have any savings at all also fell from 25% in December to 21% in January.

The group attributed the increase in the number of people who were saving to consumers making New Year's resolutions to start building up their savings.

It added that it may also be due to the rise in VAT at the beginning of this year, which could have caused people to spend less money, leaving them with more spare cash to save.

Andy Hutchinson, head of savings at Nationwide, said: "Although there is still a lot of room for improvement, it is nonetheless encouraging to see a rise in the number of savers in January 2010.

"This is despite the continued low interest rate environment - the last time there were so many savers, the Bank of England base rate was 5.00%.

"I think this shows that good returns are still available, especially for those who are willing to lock part of their savings into longer term bonds."

The rise in the number of people setting aside money helped to push up the group's savings index by two points to 85.

There was also a 12-point jump in the index which measures how important people think it is to save, with this rising to 98, following a sharp fall in December.

But there was a slight dip in the future savings index, while the index that measures the savings environment fell to its lowest level since July last year, possibly due to rising inflation eating into the returns people can earn on their money.

Mr Hutchinson said: "Although the Bank of England base rate has been very low for the past year, real returns on savings were relatively high in that period, once inflation has been taken into account.

"However, the most recent figures from the Office for National Statistics show that the annual rate of inflation has risen, which, if it continues, may threaten the long term real rate of return on savings."

TNS-RI questioned 1,000 people between December 21 and January 17.