There’s uncertainty over whether the latest inflation figure - showing an annualised drop from 10.1 per cent last month to 8.7 per cent now - will be enough to stop future interest rate rises.
Prominent business analyst Sarah Coles, from consultancy Hargreaves Lansdown, believes a further increase in Bank of England base rate is still likely. She says: “The jury is out over how far and how fast inflation will fall, and there are still concerns that wage rises will feed higher prices. However, the Bank of England thinks inflation will drop from here, and will be closer to 5% by the end of 2023.
“The Bank of England knew this was coming, and why, so it’s not going to get over-excited at the prospect of falling inflation. It’s also likely to have an eye on core Consumer Price Index - which actually rose from 6.2 to 6.8 per cent, the highest it has been since 1992. The fact this is on the way up is likely to fuel expectations of a rate rise when the Bank meets next month.”
Nicholas Hyett, an investment analyst at the wealth management service Wealth Club, feels the same: “The energy shock may be fading, but month-on-month inflation is higher in April than it has been at any time since last October as communication, transport, alcohol, tobacco and food prices continue to rise.
“Core inflation, the kind of price rises that are created by the UK domestically, rather than forced upon the country by global energy and food prices, is at the highest it’s been in over 20 years … [the] numbers probably strengthens the case for higher interest rates at the next Bank of England meeting, and that means the pain will continue for consumers and businesses alike.”
Mortgage brokers, however, are broadly more optimistic on the impact of the data.
“The fact that it is no longer in double digits is likely to be enough to halt the seemingly endless hammer blow of interest rate rises … The next [Bank of England] Monetary Policy Committee meeting may see a pause in rates but this data perhaps pushes any hopes of rate cuts a little further down the line" suggests Wes Wilkes, chief executive of Net-Worth Ntwrk, a wealth management service.
Samuel Mather-Holgate of Mather & Murray Financial says: “There will be more, significant falls to come. The Bank of England are ultra cautious on inflation though, and won’t start moving on rates until we are near target, so probably not until September.”
And Graham Cox, founder of the SelfEmployedMortgageHub, adds: “Further Bank of England base rate increases are hopefully less likely, which could see Sterling come off its recent gains against the Dollar and Euro."
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Inflation is caused by the first pay jump three years ago, pushing commodities / businesses / energy / Everything to jump then you start a vicious circle in economics on this hyperinflation, forded by more greedy. You bring this on yourselves, GREED pushing hiking prices and expecting all of us to keep paying..
( what do you do )
CUT YOUR CLOTH!
Stop Spending money you don’t have to live a life you can’t afford
Business then start to go bust
People loose these jobs
Prices then come down
Coming out of the EU - uk people never was given the correct information we created this mess
Thanks for the debt -
Printing money like the government did to hand out Trillions when we had lockdown - for the Uk to drink freely and party for 12 weeks
Well done
For as long as the British government needs money by selling government bonds at a higher rate of interest in order to generate funds to pay BAE for purchasing arms to send and fuel Ukraine war, the rates will obviously go up. And who benefits out of that, BP, Shell, Texaco, Chevron, Esso, Elf ...Curbing inflation is just Bull S...t Just look at the profit figures for these oil cartels. It runs to trillions. Shame.
Are you suggesting we shouldn't help Ukraine.
Oil companies need profits to invest and attract investment funds just like Landlords do.
Look what happens when you demonise Landlords. Renters (customers) suffer.
Fuel prices are down 40 % since Putin invaded Ukraine, showing market forces at work.
No Robert, I am suggesting instead of fuelling this war, get the parties around a table and get them to find a negotiated settlement. In Minsk agreement 2014 Russia agreed to honour Ukrainian borders provided Ukraine does not join the NATO. Ukraine agreed. Then with fingering from London and Washington, Ukraine decided to go back on the 2014 agreement. Same as Kennedy missile crisis in 1962 this is Russian security at stake. Russia will never allow NATO nuclear missiles at its borders. One should expand their research upon this matter, rather than listening to Western media alone and their propaganda.
Ukraine has NOT joined NATO, but Finland, also bordering Russia HAS, so are you saying Russia would be justified in invading Finland if it exercised its right to put defensive weapons on its border with Russia?
I remember the 1962 Cuban missile crisis and I recollect the Russians saw sense and scuttled back home. I realise Putin isn't as sane as Kruschev and the mistake the West made was to tolerate the annexation of Crimea, although a properly run referendum is possibly the best way to resolve who controls Crimea now, given the mixed ethnicity of the population.
Yes the rate will go up at least one more time, probably 0.25% in September, the core rate of food is still high and it’s this along with other factors that will drive up the rates.
Also bankers want higher interest even if it's not absolutely necessary.
Giving the Bank of England independence was yet another of Gordon Brown's errors.
Yes it is very possible, however if interest rates hold then in time inflation will come down.
The full effects of the current rises have not kicked in and the B of E need to give this time, if they carry on putting rates up as they have been they will cause more harm.
We ned moderation in all areas now.
Andy
I agree but am not sure we can trust bankers to be that pragmatic, given an opportunity to make higher profits from higher interest rates which are not passed on to savers.
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