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CPI hitting 2.3% "effectively closes the door on a December rate cut"

ended 20. November 2024

The October inflation data was published this morning and it shows the Consumer Prices Index (CPI) rose by 2.3% in the 12 months to October 2024, up from 1.7% in September. Meanwhile, core CPI (excluding energy, food, alcohol and tobacco) rose by 3.3% in the 12 months to October 2024, up from 3.2% in September; the CPI goods annual rate rose from negative 1.4% to negative 0.3%, while the CPI services annual rate rose from 4.9% to 5.0%. Newspage asked experts how this could impact the Bank of England's MPC and the trajectory of interest rates, what it could this mean for mortgage rates and the wider property market, as well as savers, investors and the Pound. Their views are below.

16 responses from the Newspage community

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Harps Garcha
Director at Brooklyns Financial
The latest inflation figures show the UK economy is still under pressure, making it likely that interest rates will stay higher for longer. Rising costs, like the energy price cap, employers' NI and the minimum wage, haven’t fully hit home yet, which means inflation will remain stubborn. This isn’t great news for the property market either, with high borrowing costs putting people off buying or refinancing. Unless inflation falls significantly, rate cuts seem a distant hope, with 2025 looking like a tough year ahead.
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Riz Malik
Independent Financial Adviser at R3 Wealth
In fairness, even the Bank of England told us they expected inflation to rise, so todays news is not surprising. However, this certainly doesn’t help the current administration who can’t even get their CV straight. There is more chance of peace on earth than a rate cut in December.
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Daniel Hobbs
Managing Director at New Leaf Distribution
So much for a pre-Christmas rate cut. This is a real blow to the economy, mortgage holders and bricks and mortar. Inflation is on the way up again, quite aggressively too, and that means rates will stay higher for longer. It feels like the whole economy has deteriorated since the Budget.
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Emma Jones
Managing Director at Whenthebanksaysno.co.uk
This is not the news anyone with a mortgage wanted to see. There's every prospect lenders will now continue to hike rates and a base rate cut in December is almost certainly off the table. There was such optimism just a month or so ago and now it feels like the walls are closing in.
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John Choong
Head of Equities and Markets at Interpretiv
Today's CPI data effectively closes the door on a December rate cut. Given the figures were higher than market expectations, the outlook for inflation remains challenging due to a higher October base effect. The persistent rise in core PPI is also another worry, and signals potentially stickier core CPI to come. And while lower fuel prices had offered a glimmer of hope that could help offset some of the inflationary pressures from the higher energy price cap and food prices, mounting geopolitical tensions and rising crude prices suggest higher fuel prices instead. Key MPC swing voters such as Governor Bailey and Deputy Governor Lombardelli have also signalled their preference for a gradual approach to rate cuts. Their repeated emphasis on the upside risks to inflation at their Treasury speeches yesterday, combined with the already hawkish stances of Greene, Mann, and Pill, effectively secures a 5/9 majority in favour of a hold next month, thereby making a December cut improbable.
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Iain Swatton
Director at Exemplar Financial Services
Since the Budget, a rise in inflation was on the cards, but October’s CPI jump feels like a reality check we didn’t ask for. The Bank of England’s rate-cutting plans now look more like wishful thinking. Lenders are already hiking mortgage rates, bracing for base rates to stay put. For borrowers, it’s another round of “brace yourself”—higher costs, fewer options, and a property market that’s looking increasingly out of steam. With the budget doing little to lighten the mood, the message for homeowners feels more “hang in there” than “help is on the way.” Let’s hope inflation settles before confidence takes a hit it can’t recover from.
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Kelsey Phillips
Head of Specialist Lending at Arose Finance
Over the past month, lenders have disagreed in their interpretation of the Autumn Budget, Trump’s election win and the Bank of England base rate cut. Today the signal is clear with CPI rising to the highest it has printed since April this year. In the UK we import ~£882bn of goods and services annually, inflation has been supported by the Pound depreciating 2.25% through October (and another 2.3% in November). If Cable remains depreciated and anticipated US import tariffs are imposed, the consequent inflationary pressures could ultimately support higher UK Gilt yields. In that environment, we could see marginally higher mortgage rates and the Bank of England cutting more cautiously than previously anticipated, leaving a December base rate cute unlikely.
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Rohit Kohli
Director at The Mortgage Stop
This morning's inflation figure has surged sharply to 2.3%, surpassing the Bank of England's 2% target. While not entirely unexpected, given that the Energy Price Cap increase wasn’t fully factored in last month, it’s still a significant spike. With the recent Budget's impact and escalating global tensions, it’s highly unlikely that the already cautious Bank of England will cut the base rate in December. Struggling households and businesses hoping for relief through lower rates will face ongoing pressure. This rise will likely dent business confidence even further, hindering growth at a crucial time for the economy.
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Michelle Lawson
Director at Lawson Financial
It was good while it lasted. Stand by for mortgage rates to keep increasing and a base rate hold in December. Inflation will go up again due to the recent Budget. Don’t worry though, folks, it’s not the PM’s fault.
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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
A new government, a brutal budget, and now soaring inflation – this is a grim trifecta for the UK economy. The rise to 2.3%, coupled with stubbornly high core inflation, is a blow to hopes of stability. It leaves the Bank of England little choice but to keep rates high, piling misery on mortgage holders and freezing the property market. For a government promising economic competence, these figures are a damning indictment of failure to get inflation under control.
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Craig Fish
Director at Lodestone Mortgages
Keir Starmer and his team will likely continue to shift blame elsewhere, avoiding accountability as we've seen since they took over at No. 10. However, this approach is showing cracks, much like the state of the economy itself. The coming year will be a challenging one, with turbulence ahead for both homeowners and the housing market. A further base rate cut now seems unlikely until at least February, and we can expect mortgage rates to remain volatile for some time. This prolonged uncertainty will continue to dampen activity in the housing market, leaving buyers and sellers in a difficult position, and reducing the stamp duty cofers that Reeves so hoped to bolster. Her credentials really do need checking.
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Chris Barry
Director at Thomas Legal
This is really bad news for borrowers and further rate cuts from lenders will not happen any time soon. Worse, inflation is really just finding its feet. It had a sharp rise in the UK due to the heavy reliance on imported food and energy immediately following the inception of the war in Ukraine, dropped sharply a year later and is now correcting to a level above the Bank of England target of 2%. This is not surprising news given how high services inflation is and this has never really been tackled. Services inflation is actually predicted to go up, pushing the overall number further north.
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Simon Bridgland
Director at Charwin Private Clients
Rachel Reeves needs to be donning a tin hat in the trenches of Westminster today and the PMs questions could be toe curling if it wasn’t for the stone faced denial we will all witness as the current government march on blind to what they have done. The impact for borrowers will be felt for months to come, as although markets had already priced in an increase, further misery is yet to come. I would not be surprised to see again up to another .5% increase to the price of fixed money before the year is out.
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Justin Moy
Managing Director at EHF Mortgages
As expected, it is a significant jump in headline inflation and totally wipes out the recent hard work on reducing costs and mortgage rates in particular. Underlying inflation is just as depressing, definitely pushing the decision on future cuts in base rate well into 2025. This dreadful data suggests the scope of any cuts next year will be superficial at best. It's been nothing but a bumpy ride since the Autumn Budget, and those pot holes will need filling quickly.
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David Stirling
Independent Financial Advisor at Mint Wealth
The spike in inflation is a real blow and the impact of the Budget has yet to be felt. Starmer and Reeves are currently on the news with their heads in the sand denying all knowledge. On top of surging inflation, farmers and business owners are protesting about the Budget and the impact it will have on their futures, repossession and bankruptcy figures were up earlier in the week, economic growth is stagnant at 0.1% and finally mortgage rates are all going up. It's hard to see where the good news is going to come from for both the economy and beleagured borrowers, with the squeeze on households from increased food and fuel bills still yet to bite this winter.
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Ben Perks
Managing Director at Orchard Financial Advisers
The Tories will be dining out on this. They gave Labour the perfect pass in terms of inflation. All they had to do was not drop the ball, but butterfingers Starmer has fluffed it. This isn’t the data we wanted, it kills any Bank of England base rate chances and ultimately means a slower start to 2025 than anyone wanted.