UK inflation has increased as the year comes to an end, with global factors such as the price of fuel and garments influencing the rise.
But despite climbing costs – some property experts remain hopeful for ‘stability’ for the housing market, with others stating there could be a risk that the UK may slide into a ‘technical’ recession.
The UK CPI index of inflation jumped to 2.6 per cent from 2.3 per cent in October, heading further away from the Bank of England’s target, prompting analysts to predict that interest rates ‘are not likely to be cut on Thursday’.
The economy may have a chance for increased stimulus early next year with a trend showing Chinese stocks are on the rise, providing a possibility for an economic boost.
However, with the cost of living in the UK increasing once more, consumers are less likely to ‘have confidence in the housing market’ whilst struggling for necessities.
Movera’s CEO Nick Hale noted that it would be ‘too good to think of this as a temporary blip’ and the longer term impact of the Government’s budget has ‘rattled business confidence’. He said: “There is little festive cheer in today’s figure which marks the second consecutive month that inflation has risen. Driven by higher energy costs and services inflation, the figure is even further adrift from the Bank of England’s target.
Christmas is unlikely to come early on Thursday either, as the Bank of England’s Monetary Policy Committee is predicted to hold off on lowering interest rates.
“It would be good to think that the rise is a temporary blip. But there are too many unknowns, including the longer term impacts of the Government’s Budget which has so far rattled business confidence. What is certain is that we are still in the midst of a housing crisis. To give homebuyers a much-needed confidence boost, we can only hope that the Bank of England’s New Year resolution will be to lower interest rates as soon as it can. As ever, our focus at Movera will be on providing fast and reliable services for those looking to move or remortgage this year.”
Martyn Smith, Managing Director at Black & White Bridging, says that for lenders and businesses there lies a ‘challenging environment ahead’, he spoke on the inflation rate saying:“Unfortunately, inflation seems determined to leave the economy anything but ‘merry and bright’ this Christmas. CPIH has climbed to 3.5% in November, up from 3.2% in November, and CPI reaching 2.6%, from 2.3% previously a second consecutive monthly rise. On a monthly basis, these increases signal persistent inflationary pressures, particularly driven by transport.
“At the same time, last week’s GDP figures revealed a second consecutive monthly decline of 0.1% in October, following a similar fall in September. While Real GDP showed marginal growth of 0.1% over the three months to October, with growth in the construction sector, the trajectory is still deeply concerning. Declining production output continues to drag on overall performance.
“If inflation continues its upward climb into next month, coupled with further GDP contraction, the UK could find itself in a technical recession. For lenders, businesses, and households alike, this presents a challenging environment marked by squeezed budgets, increased borrowing costs, and mounting uncertainty.
“We remain committed to supporting our broker partners through this changing climate, offering flexible and reliable solutions to help navigate the pressures ahead. It is crucial that policymakers strike the right balance to control inflation without stifling growth further.”
Propertymark have also had their say on the economic forecast, saying that the UK economy has ‘faced challenges’ and ‘stability and constancy would bring confidence to buyers, their CEO Nathan Emerson, said: “Many consumers will no doubt be disappointed that inflation has increased as we head towards the end of the year. There are still many national and global factors that impact the UK economy, so hopefully inflation will better stabilise in the early months of 2025.
“Considering the enormous challenges the UK economy has faced over the last four years, Propertymark are keen to see a period of constancy that brings better levels of affordability and confidence for both buyers and sellers.”
