Inflation rate remains steady in ‘silver lining’ for property market

The rate of inflation remained at 4% in the 12 months to January, but housing costs in property market remain high, Office for National Statistics (ONS) data has revealed.

The ONS figures show the largest contribution to the rate of inflation last month was housing and household services, mainly gas and electricity bills, which were up 2.5% annually.

Furniture, food and non-alcoholic beverages pushed the rate down.

The headline figure is still double the Bank of England’s target of 2%, while core inflation, which strips out volatile measures such as energy, remains high at 5.1%.

Nathan Emerson, chief executive of agency trade body Propertymark, suggested the freeze represented a silver lining for the property market.

Emerson 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 Estate Agent Today