Consumer price inflation (CPI) remains broadly steady, rising by 3.4% in the 12 months to May 2025, compared to 3.5% in the 12 months to April. The consumer price index including owner occupiers’ housing costs (CPIH) rose by 4% for the same period, compared to 4.1% the previous month.
However, both CPIH and CPI inflation rates were overstated in April as a result of an error in Vehicle Excise Duty figures, meaning the adjusted figures reflect no change.
There has been a calm reaction from property and finance experts, with none of the industry commentators seeing any major cause for concern.
Property: Not the drop we were hoping for but housing market remains active
Nathan Emerson, CEO of Propertymark, said the new figures don’t reflect the drop many people were hoping for during the traditionally busy summer months, but noted inflation was incorrectly reported as being 0.1% higher than the true figure last month.
“All eyes will be on the Bank of England tomorrow as to whether they reduce the base rates further in response to today’s news, and the changing trends of the international economy. A drop in rates would, of course, further help stimulate the housing market, which is a vital engine of economic growth.”
Nick Hale, CEO of Movera, said the steady rate offers a period of calm to conveyancers:
“A steady inflation reading offers breathing space — for policymakers, for lenders, and for movers. After a protracted period of volatility, steady CPI figures help reinforce the sense that we’ve turned a corner, even if only slightly. It’s not yet a green light for rate cuts, but it’s a useful pause.
“With inflation still above target and wage growth holding firm, the Bank of England remains boxed in — cautious not to overstimulate before the disinflation trend is secure. That might frustrate some in the housing market, but for conveyancers and brokers, it creates a working window: a moment of relative consistency where client decisions aren’t being undone by fast-moving economic variables.”
John Phillips, CEO of Spicerhaart , said there are some positive signs and there are no shortage of enquries:
“Inflation holding firm in May feels like a rebalancing after April’s figures reflected the likes of Easter air fares and many one-off factors, while higher costs at the supermarket and on other household goods in May prevented any chance of making positive progress. While stability is good, I still wouldn’t be planning my rate cutting party for tomorrow’s MPC decision as the central bank is likely to keep to its careful and gradual approach. That is also true given fresh escalation in the Middle East which is likely to cause volatility – particularly when it comes to oil prices – and push costs higher.
“Away from geopolitical tensions, there are some positives on the horizon for inflation – most notably the 7% cut to the energy price cap in July – which will have a positive influence on inflation. Alongside its own predictions on inflation, the central bank will be paying close attention to a rise in unemployment and an economy that is shrinking. This will no doubt play into its decision making and will encourage some movement on the base rate. Improving swaps will create opportunities for lenders, which will be welcome for potential borrowers.
“Even so, what is encouraging for us is that clients are still coming through the door in good numbers, whether it’s for valuation requests, buyer registrations or mortgage appointments. Key to this is the proactive approach of advisers to answer the appetite in the market and demonstrate the opportunities already available for borrowers at every stage of life.”
Finance: volatility continues but buyers should look at the bigger picture
Matt Smith, Rightmove’s mortgage expert, expects the Bank of England to act cautiously and warned forecasts would be volatile for a while:
“As the rate of inflation stays above 3%, the expectation is that the Bank of England is set to act cautiously. Anticipation had risen that we may be in line for multiple Base Rate cuts this year at the peak of tariff uncertainty, but as some of these pressures have eased, this expectation has fallen back.
“Forecasts for the rest of the year are likely to jump around a bit due to ongoing global uncertainty and changes in how the market expects things to pan out. However, the current view is that we’re only expecting one more Base Rate cut this year, and tomorrow’s decision by the Bank of England is likely to be a hold.
“As for average mortgage rates, these have stayed pretty flat for the last few weeks as the opportunity for lenders to lower rates has reduced. Despite this, we’re seeing an active housing market at the moment, with May having been the strongest full month for agreed property sales since March 2022.”
Simon Webb, managing director of capital markets and finance at LiveMore, said the easing of inflation may boost the chances of a rate cut from the Bank of England:
“Lower inflation strengthens confidence across the mortgage market and could bring renewed energy among borrowers who’ve been holding back. For the later life sector, where financial needs are often more complex, this stability is particularly valuable.
“We continue to see strong interest from borrowers over 50 who want flexible lending options that align with their retirement goals or income mix. The long-term fundamentals of the later life lending market remain robust, and today’s data is another step in the right direction for both brokers and consumers looking for certainty.”
The CEO and co-founder of ASK Partners, Daniel Austin, was reassured by today’s news but said developers are keeping a close eye on the market:
“Today’s hold in UK inflation offers some reassurance following recent volatility and a continued interest rate hold by the Bank of England. With global uncertainty, fuelled by tariff tensions and ongoing domestic tax changes, still weighing on markets, the key question now is whether the Bank’s rate pause remains sustainable.
“For homeowners and buyers, hopes of lower borrowing costs remain high, but persistently elevated fixed mortgage rates could delay any real relief. While house prices have stalled since the end of the stamp duty holiday, any drop in swap rates, sparked by Trump-related volatility, could revive momentum if it feeds into better affordability.
“Investors and developers are watching closely. Appetite remains strong in resilient sectors like co-living and build-to-rent, where supply constraints keep capital active. But a stable, downward rate trajectory is key. If rate cuts come, it could reignite activity, but with uncertainty still high, staying nimble is essential.”
And Ben Thompson, deputy CEO at the Mortgage Advice Bureau, urged borrowers to look at the bigger picture:
“With inflation holding at 3.4%, it’s crucial to look at the broader picture if you’re thinking about getting a mortgage. We’re seeing more innovative mortgage products and increasingly flexible lending criteria becoming widely available. Plus, interest rates are significantly lower than they were this time last year.
“All eyes remain on developments across the pond, which will likely continue influencing swap rates and inflation throughout the summer. Despite this, lenders are still very much keen to lend, making it an extremely positive market for borrowers to take that first, or next, step on the ladder.”
