ONS announces that UK inflation rate slows to 4.6%
The UK inflation slowed to 4.6% in October, in signs that the higher base rate is having the desired effect in curbing inflation.
This represents a sharp drop from the 6.7% inflation rate in September, while it allows Prime Minister Rishi Sunak to declare he has met his pledge to halve the rate of price rises by year end.
Danny Belton, head of lending at Mortgage Advice Bureau, said:
“The drop in inflation is good news for homeowners and prospective buyers and will reinforce the view that the worst of the interest rate hikes is behind us.
“Now we look to see how the Bank of England will react.
“The last time the rate setters met, we saw a second hold after a long upward interest rate cycle, but we may well be at the end of that.
“Swap rates have been softening over the last few weeks, and this has prompted a flurry of lenders to reduce rates, with mortgage deals below 5% now available on the market – a sigh of relief for many borrowers.
“While it’s hard to predict what will come next without a crystal ball, significant cuts to the base rate are still unlikely in the near future.
“Despite inflation falling, it may be a while before deals drop far from current levels.
“For people considering their next mortgage move, it remains as important as ever to seek advice.”
Last week Bank of England Governor Andrew Bailey said it was too early to discuss rate cuts. The base rate currently stands at 5.25%.
Sarah Coles, head of personal finance, Hargreaves Lansdown, said:
“One of the biggest drivers of the fall in inflation has been the lower energy price cap in October, which cut prices by 7%.
“This is compared to a huge hike the same time last year, so the different is striking. Gas is down 31% in a year and electricity down 15.6%.
“It’s worth highlighting that despite this dramatic drop, prices are still eye-watering compared to where we were before all this kicked off, which means keeping warm this winter is going to be a horribly expensive business.”
Julien Lafargue, chief market strategist at Barclays Private Bank, said it’s likely to be a tough few months ahead, despite this good news.
“The UK economy is still very much facing stagflation and, in our view, the road ahead will likely continue to be bumpy.
“In this context, and given the significant progress achieved on inflation’s front over the last six months, we would expect the Bank of England to keep interest rates unchanged for a few more months.”
Kindly shared by Property Wire