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Inflation edges up to 2.2%: "I don’t see a reversal of the recent rate reductions from lenders"

ended 14. August 2024

Headline CPI inflation came in at 2.2% in July, back above the Bank of England’s 2% inflation target, according to official data published this morning. The positive news, however, is that the stickier elements of inflation continue to fall. Core inflation fell to 3.3% from 3.5%, while services inflation eased much more than expected to 5.2% from 5.7%. Newspage asked brokers and property experts what this could mean for mortgage pricing, borrowers and the broader property market — and whether a cut in September is now unlikely. Their views are below.

9 responses from the Newspage community

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Ranald Mitchell
Director at bad credit mortgage specialists Charwin Mortgages
The slight rise in headline CPI to 2.2% is unlikely to disrupt current downward mortgage pricing trends, as the continued easing of core and services inflation suggests underlying pressures are diminishing. While an interest rate cut in September may be less likely, lender competition with mortgage rates should support borrower demand and maintain resilience in the property market.
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Rohit Kohli
Director at The Mortgage Stop
This morning's inflation numbers, whilst up on last month, also include positive movements such as services inflation being much lower than forecast. The road to recovery was always going to have a few bumps along the way and so today's numbers are not a cause to panic. I don’t see a reversal of the recent rate reductions from lenders as a result of this morning's numbers, which is good news for borrowers.
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Rob Gill
Managing Director at Altura Mortgage Finance
Today’s inflation figures are good news with every measure below expectations, including the much watched Core and services numbers. This leaves a September base rate cut very much on the table and should allow lenders to carry on cutting mortgage rates.
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Clive Read
Owner at Goldmanread
Today's inflation figures show we are clearly not out of the woods when it comes to inflationary threats to the economy. Focus will be on the Bank of England and whether they cut too early in August. It could be argued that the cut was as much a politcical move as a response to economic conditions. Its clear inflation is going to remain stubbornly high and we believe it's unlikely we are going to see another cut until at least November. Mortgage rates have reduced recently in response to the rate cut but we expect these rates to stabilise for the time being although there may be some further movement on longer term fixed rates mainly as a result of lender competition.
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Riz Malik
Independent Financial Adviser at R3 Wealth
Although the weather may not be cooling, services inflation is, offering some relief for the Bank of England. While no one expected inflation to stay at 2%, the current data doesn’t point to a rate cut at the September meeting. With no meeting in October, November could still present an opportunity for the second base rate cut of the year.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
This is a more positive inflation print than the headline rate may suggest. The big win is the fall in services inflation which has come in under forecast and for too long had been sticky and causing concern to the Bank of England. These results overall should see lenders continue to have confidence and reduce rates.
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Chris Barry
Director at Thomas Legal
Today’s news of 2.2% inflation is positive for the UK economy. The huge drops we have seen over the course of this year have been mainly due to corrections in the energy and food spike caused by the war in Ukraine. The more worrying point, while headline inflation sat at 2%, was that services inflation remained high and stubborn. While today's news does show a slight uptick in the headline rate, to see services inflation starting to show a meaningful downward trend is really encouraging. The conclusion by most will be that the MPC will be keen to delay a further rate cut but digging into the underlying data, a cut before Christmas cannot be ruled out.
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Ben Perks
Managing Director at Orchard Financial Advisers
A base rate reduction in September was always unlikely, but now seems totally out the window. It is unnerving to see inflation on the rise again, but an uptick to 2.2% is better than anticipated. No need for panic stations yet. This data should have very little impact on swap rates and the interest rates available to borrowers should continue to trickle downwards. Core inflation could ride to the rescue.
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Michelle Lawson
Director at Lawson Financial
Although inflation as a whole has crept up, the key pointers show overall things are cooling. This will be music to everyone’s purses. Let’s hope the Bank of England’s ears are listening as this could very well indicate an additional September rate cut if the next CPI data is on the same path. The tables appear to be turning- anyone looking to buy property should consider doing so sooner rather than later.