UK CPI inflation has risen from 2% in June to 2.2% in July, marking the first increase in 2024, although it is below the predicted forecasts of 2.3%.
In the 12 months to July, core inflation came in at 3.3%, down from the 3.5% recorded last month. It continues the trend of core inflation declining and it now sits at its lowest level since September 2021.
It is widely anticipated that a September rate cut is unlikely to happen, although industry experts have highlighted that the Bank of England had priced in a rise in inflation and predict that a further rate cut could be on the cards later in 2024.
Propertymark chief executive officer Nathan Emerson adds: “The pathway to a strong and stable economy does come with ups and downs along the way, so today’s fluctuation, while disappointing, is an unfortunate but accepted part of the process. Households remain in a stronger position than only 12 months previous, but there is potential the BoE may reflect on today’s figures very carefully when the MPC next meet to decide on interest rates.”
“While Propertymark is keen to see a further lowering of interest rates, it’s essential to bear in mind this process must be carefully considered to keep the economy firmly on track.”
Mortgage Advice Bureau deputy chief executive officer Ben Thompson says: “It’s been a good August for those with mortgages and, indeed, first time buyers. A slight uptick in inflation in July therefore shouldn’t dampen spirits too much, and to some degree was expected.”
“However, it’s important to note that inflation holding steady (or indeed falling back down to 2%) in the next few months will be vital to encourage more interest rate cuts from the BoE. That path however is also currently expected too.”
“For now, lenders would have already factored in the last rate reduction and will be basing current fixed rates on future interest rate expectations, so we wouldn’t expect this to have a big impact on the rates currently being offered.”
