Real Estate

Inflation rate falls to 3.2%

The CPI inflation rate dropped to 3.2% in March from 3.4% in February – a decrease that’s been deemed disappointing by economists.

It was expected that the inflation rate would drop to 3.1% by economists polled by Reuters and the Bank of England, which could mean it takes longer for the Bank to cut interest rates than previously thought.

Derrick Dunne, chief executive of YOU Asset Management, said: “Inflation continues its trajectory back to the Bank of England’s 2% target, but its pace downward is slowing to a grind, which is a cause for concern for anyone interested in seeing rates come down.

“The likelihood here is that with inflation persisting above target, and wage growth continuing to be unusually strong, the Bank of England isn’t getting the strong rate-cut signals it wants to see from the economy yet. With GDP also showing signs of recovery, hopes for imminent rate cuts are diminishing by the day.

“The simple fact is that the signals aren’t yet compelling enough for the MPC to say it’s time to begin lowering rates. This won’t come as good news for mortgage holders or prospective homebuyers, nor will it encourage markets to push on.”

Core inflation, which removes volatile energy and food prices, declined to 4.2% in March from 4.5% in February. Analysts expected it do decline to 4.1%.

Paresh Raja, chief executive of Market Financial Solutions, said: “This outlook is positive, but the economic environment remains challenging. Today’s inflation data will continue to imbue the property market with a growing sense of confidence as the economic horizon brightens.”

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