September interest rate cut ‘unlikely’ as inflation rises
Inflation has increased for the first time this year during July, dashing hopes of a further interest rate cut in September.
The rate of inflation increased from 2% to 2.2% last month, official figures show
The Office for National Statistics (ONS) said the largest upward contribution came from housing and household services where prices of gas and electricity fell by less than they did last year.
Monthly housing and household services prices rose by 0.1% in July 2024, having fallen by 1.4% last year, the ONS said.
The annual rate rose to 3.7% in the year to July 2024, up from 2.3% in the year to June.
Commenting on the data, Sarah Coles, head of personal finance for Hargreaves Lansdown, said:
“The Bank of England was expecting a rise in inflation.
“It means this isn’t going to trigger a U-turn on Threadneedle Street, and we’re very unlikely to see rate cuts reversed in September – especially given the fall in core inflation.
“However, the rate is unlikely to be cut during the month either, given the increase in inflation came on the back of unemployment figures that revealed the jobs market is looking healthier than expected, and wage rises continue to outstrip inflation.
“The market is still expecting at least one more rate cut before the end of the year – possibly two – but this is by no means nailed on.”
Nathan Emerson, chief executive of estate agency trade body Propertymark, added:
“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 Bank of England may reflect on the figures very carefully when the Monetary Policy Committee 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.”
Kindly shared by Estate Agent Today
