The UK inflation rate has remained at 4% (February 2024)

The Bank of England has announced that the UK inflation rate (February 2024) has remained at 4%, defying forecasts of a rise.

The Bank expected the inflation rate to rise to 4.1%, while economists polled by Reuters expected a 4.2% increase.

The inflation rate was kept down by food prices dropping by 0.4% on a month basis.

Services inflation went the other way, rising by 0.1% month-on-month to reach 6.5%.

The steady inflation rate is said to make it more likely for the Bank of England to next opt for a base rate cut, rather than a further rise from its current level of 5.25%.

Ben Thompson, deputy chief executive at Mortgage Advice Bureau, said:

“Inflation remaining the same will be music to the ears of rate setters at the Bank of England.

“January’s headline rate had been expected to rise slightly, so this will be seen as good news. Swap rates have been unsettled over the last week, but this reading will fuel more talk of interest rate cuts.

“Inflation is unlikely to fall in a straight line, and as we’ve already seen, there will be ups and downs.

“However, 2024 is looking to be a more positive year for mortgages.

“We’ve seen weekly customer volumes close to those of June and July 2023, and with a drop in interest rates potentially coming into view, the outlook is bright for those looking to refinance or get onto the property ladder.”

Nathan Emerson, chief executive of Propertymark, said:

“There is a silver lining in the fact that inflation has stayed the same as we are unlikely to see any increases to borrowing and further strains on the purses of the nation.

“That being said, the Bank of England made an optimistic projection in February that the rate of inflation would be back down to two per cent, like it was prior to the pandemic, and whilst the figure remains at four per cent, this will be sure to make them cautious about cutting rates.

“We now need to start seeing inflation fall so that interest rates can drop too, as this will result in more people being able to move home or step onto the housing ladder.”

Kindly shared by Property Wire