UK consumer price inflation (CPI) rose by 3.6% in the the 12 months to June, up from 3.4% in the 12 months to May. The monthly rise was 0.3%, compared to 0.1% in June 2024.
CPI including owner occupiers’ housing costs (CPIH) rose by 4.1% in the 12 months to June (up slightly from 4.0% in May).
While the property industry has remained mainly optimistic in the face of mixed market signals in recent weeks, today’s announcement was met with a more muted response.
Propertymark CEO Nathan Emerson commented:
“This news will provide no respite for people who are struggling with their personal finances at a time when there is widespread data suggesting Britain’s finances are in a ‘perilous’ state.”
“Housing plays a pivotal role in the UK economy, and considering the UK Government and the devolved administrations have set themselves ambitious housing targets, it’s important that there is strong affordability to support consumers with their housing ambitions.”
Sharon Beedham, relationship director at ONP Solicitors, said:
“Rising inflation adds another layer of complexity to an already fragile housing market. While Rachel Reeves’ announcement aims to support first-time buyers with expanded lending and mortgage guarantees, higher inflation could lead to increased interest rates, which in turn could dampen affordability and slow buyer momentum. It creates a difficult balancing act between making credit more accessible and ensuring it remains affordable over time.”
Finance experts were divided on the impact the rise would have on the interest rate. Ben Allkins, head of mortgages and protection at Just Mortgages, and Rightmove’s mortgage expert Matt Smith both believe a cut is imminent.
Smith commented:
“A slightly higher than expected inflation figure this morning, but we’re still on track for inflation to peak this summer before falling back as the Bank expects. The average two-year mortgage rate is now 4.53%, a significant drop from 5.34% last year, with hopefully two more Bank Rate cuts still to come, which could help to drive rates down further.”
Allkins said:
“The question on everyone’s lips is what impact this jump in inflation will have on the MPC meeting next month. While it has risen and further pressures are likely to push inflation higher throughout the year, disappointing GDP figures for a second successive month and a weak labour market are still likely to deliver the rate cut that is widely expected in August.”
But managing director of capital markets and finance at Livemore Simon Webb disagrees. He commented:
“While today’s rise in inflation may delay hopes of an imminent rate cut, it’s important to remember that progress towards economic stability is rarely linear. Setbacks like this are part of the journey, and the broader trajectory still points to easing price pressures over time.”
However, Mortgage Advice Bureau deputy CEO Ben Thompson remains optimistic in relation to the housing market.
He said:
“A slight uptick in inflation is a reminder that the path back to target won’t be completely smooth and entirely predictable. While the overall outlook into next year remains downward, persistent pressures—especially in services—may give the Bank of England reason to pause before moving on rates.
“It is, nonetheless, a great time to buy. With house prices having adjusted over the last few years, and numerous mortgage options now available, getting on the property ladder is more achievable than it has been in a while. In fact, many aspiring first time buyers who were priced out of the market last year may not realise they’re now in a strong position to buy.”
