The rate of inflation in the UK fell to 2.8% in the year to April, according to the latest figures from the Office for National Statistics (ONS).
This represents a drop of 0.5 percent from the 3.3 percent recorded in the 12 months to March.
Commenting on the latest data, director of mortgage advice bureau Ben Thompson said:
“Whether you’re looking to buy your first home, move up the ladder, or get a mortgage, inflation to 2.8% is certainly the news lenders have been waiting for.
LSL Financial Services distribution chief Emma Hollingworth said the inflation was welcome and a bit of a surprise, but she did not believe it would in any way change the Bank of England’s thinking when it comes to interest rates.
“The central bank is walking a tightrope, and if it does nothing, inflation will be at serious risk. But raising rates now will weaken the economy more than expected in the first quarter and will put pressure on the struggling labor market.
“Barring a major downturn in the Middle East, we believe the Bank will keep its powder dry this year in terms of interest rates. Rates have already risen sharply, leaving borrowers confused about what to do next and when to act. Dealers who are busy with their customers now will be the ones to help them leave the best possible solution for their circumstances.”
Just Mortgage head of Mortgage and Protection Ben Allkins said: “Inflation in April certainly feels negative and is probably explained in part by the drop in energy prices. I think if you talk to people in the supermarket or at the gas pump, they don’t hear it well as the conflicts in Iran continue to put pressure on global supply and increase prices.
Allkins said this pressure is likely to be the norm going forward, especially without a solution to the current conflict. “We will soon be looking at the basic level decision in a few weeks when opinions are still divided on the outcome.” It is possible that inflation will not be enough to stop any potential long-term rise – especially with the unexpected rise in unemployment announced this week.
He added: “Across both the leased and operating parts of our business, we’ve seen customers move on, which in many cases has meant moving forward on loans. We’re still seeing buy-to-let activity, although it continues to rely heavily on those who need to move, rather than those who want to. In both cases, it’s an important reminder of why sellers are important to the market. The priority right now is to make sure we’re busy, we’re keeping that five-star service and we’re all inclusive.” our foundations to ensure that clients are properly supported.”
Phoebus Software’s director of sales and marketing Richard Pike admitted that the surprise drop in inflation to 2.8% was good news for the economy and consumers but it was unlikely to be the start of a further fall and stressed how unpredictable the current situation was. Inflation remains stubbornly high, with upward pressure from fuel and transport costs linked to continued volatility in the Middle East.
“At the same time, the labor market remains weak, and yesterday’s unemployment and wage data will make the Bank of England think carefully about how far it can go in tightening policy without risking a deep recession,” he concluded.
