Isa savers will be able to invest around £600 more in the next tax year after the Office for National Statistics announced that inflation hit 5.2 per cent in September.
Investors are currently able to place £10,680 in the tax efficient vehicles, however that number is set to rise to £11,280 from April 2012, of which £5640 can be placed in a cash Isa.
The Isa limit was indexed to inflation for the first time in June last year, the figure is calculated to the nearest £120. The change linked Isas to RPI but from 2012 the limit will rise in line with the less generous CPI.
Hargreaves Lansdown head of advice Danny Cox says: “This is the one bit of light in the inflationary gloom. This is welcome news for savers and with inflation likely to fall from here it is a great opportunity for investors to take advantage of the increased rate.”