The UK Inflation rate jumped from 2.3% to 2.6% in October, meaning it’s fallen further from the Bank of England’s 2% target.
The next base rate decision will be made today, while the first announcement in 2025 will be made on 6 February.
The data means it’s expected that the Bank will hold the base rate at 4.75%, as a cut could stimulate higher inflation.
Ben Thompson, deputy chief executive at Mortgage Advice Bureau, said: “Inflation ticking up isn’t a present that policymakers had on their Christmas wish lists.
“It means that we will almost certainly see a hold in the last interest rate decision of the year tomorrow, despite signs that the economy has been slowing down.
“But this shouldn’t dampen any festive joy. It’s been a positive year for buyers, and that outlook continues into 2025. Prospective buyers can rest easy this Christmas ahead of what will be a good homebuying year.”
Richard Pike, chief sales and marketing officer at Phoebus Software, said: “Although expected, this rise probably means any residual hopes in the industry of a drop in the Bank Rate… can be packed away until the New Year.
“Today’s figure will be a cause for concern for those consumers who have already been tightening their belts due to austerity measures. However, as with the base rate, inflation will also drop in 2025 – it’s just a question of when rather than if.
“Arrears levels are still under control and this is a good indication that borrowers are prioritising secure debt where they can and lenders are using forbearance techniques where necessary. The expected lower inflation and rates next year will only improve this picture.”
Across the pond the US Federal Reserve yesterday cut its interest rate by 0.25%, to 4.25-4.50%.
Martyn Smith, managing director at Black & White Bridging, said: “If inflation continues its upward climb into next month, coupled with further GDP contraction, the UK risks sliding into a technical recession.
“For lenders, businesses, and households alike, this presents a challenging environment marked by squeezed budgets, increased borrowing costs, and mounting uncertainty.”
