The Consumer Prices Index (CPI) rose by 2.0% in the 12 months to June 2024, the same rate as the 12 months to May and well below its recent annual peak of 11.1% in October 2022, the Office for National Statistics (ONS) has revealed.
This figure was in line with the Bank of England’s 2% target, following a period of disruption within the economic markets.
In addition, the Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 2.8% in the 12 months to June 2024, the same rate as May and down from a recent annual peak of 9.6% in October 2022.
The monthly CPIH rate was 0.2%, the same rate as a year earlier.
The owner occupiers’ housing costs (OOH) component of CPIH rose by 6.8% in the 12 months to June 2024, up from 6.7% in the 12 months to May.
This was the highest annual rate since July 1992 in the constructed historical series.
OOH costs rose by 0.6% on the month, compared with a 0.5% increase between May and June 2023.
Reaction:
Nathan Emerson, CEO of Propertymark:
“The positive news from today’s figures is that inflation remains in line with the Bank of England’s target of 2%, which means that consumers should not continue to witness the price rises we saw across 2022 and 2023.
“Although a further drop in inflation today would have been welcome by consumers, Propertymark is keen to see the Bank of England consider a dip in interest rates as soon as sensible.
“When the pathway to lower interest rates finally happens, we should witness a real boost in affordability and flexibility within the housing market.”
Stuart Cheetham, CEO of MPowered Mortgages:
“More than two years of bitter interest rate medicine have worked – Britain’s inflationary disease has been cured.
“Yes, some worrying symptoms remain. Both core inflation and service sector inflation remain high and today’s data is far from a completely clean bill of health.
“But the progress is real and the fact the headline rate of CPI has held steady at the Bank of England’s 2% target for two months in a row suggests the worst is past.
“So the Bank’s committee of rate-setters is now likely to turn its attention to the side effects caused by the prolonged dose of high interest rates.
“From squeezing consumer spending to pushing the dream of home ownership out of reach for thousands of first-time buyers, not to mention adding hundreds of Pounds a month to many homeowners’ mortgage repayments, the Bank’s battle against inflation has inflicted a high cost.
“While economists will argue about whether it’s too soon to declare victory over inflation, the case for holding interest rates so high is eroding fast – and the Bank is likely to reflect this at its next interest rate decision in a fortnight’s time.
“The first cut in the Bank’s Base Rate may be small in percentage terms, but it will be huge in symbolism.
“The speed and scale of any monetary loosening is still far from clear, but a gradual return to more normal interest rates will ease mortgage borrowers’ pain and inject much-needed vigour into the sluggish property market.”
Jonathan Bone, mortgage lead at Better.co.uk:
“There are high hopes that interest rates will be cut next month; however, economists are warning that inflation could shoot back up later this year, which might make the Monetary Policy Committee cautious about acting prematurely.”
Michael Foote, CEO of comparison site Quotegoat.com:
“While it might seem like good news that inflation is under control, prices haven’t actually dropped – they’re just not rising as fast as before.
“For instance, energy prices are better than they were recently but are still much higher than a few years ago.
“The same goes for most other prices. Comparing today’s prices to those from mid-2021, when inflation began to rise, shows a huge increase.
“Even though inflation is now at a normal level, wages haven’t caught up with the rising costs.
“This means people are generally worse off, and the cost of living crisis continues, leaving many people just barely managing.”
Simon Webb, managing director of capital markets and LiveMore:
“Whilst many hoped it would have fallen further, this stability offers a sense of predictability for the economy.
“For the housing market, this steady inflation rate means that interest rates are less likely to see sudden increases, which is particularly important for older buyers who often rely on fixed incomes and savings.
“Labour must take hold of this opportunity to address these underlying issues and support economic stability.
“By focusing on measures that can help keep inflation in check without stifling growth, we can create a more favourable environment for the housing market.
“This is especially crucial for older buyers who may be more sensitive to economic fluctuations and interest rate changes.
“Ensuring a stable and predictable economic environment will help maintain confidence in the housing market and provide security for older homeowners and buyers.”
Nick Hale, chief executive officer at Movera:
“Inflation stalling at the Bank of England’s 2% target is still positive news for the housing market.
“Labour have inherited very favourable conditions with this lower level of inflation and this stability could even be enough to force the Bank of England to lower the base rate next month.
“It raises two questions: had Rishi Sunak held off on calling the election and waited for these conditions, would it have been such a landslide victory for Labour?
“And can Labour now harness these conditions to make the changes the sputtering housing market so desperately needs?”
Isaac Stell, investment manager at Wealth Club:
“Eyes will now turn to the Bank of England’s meeting on the 1st August and the next interest rate decision.
“On target inflation may increase appetite for a rate cut, but core inflation looks less promising, muddying the water particularly around the stickier services inflation numbers, and making an August cut look increasingly unlikely.
“The pound has edged up marginally this morning, in a sign that currency markets at least don’t think rates will be cut in the short term.”
Richard Pike, chief sales and marketing officer at Phoebus:
“No change in the core inflation rate is great news for borrowers and lenders, as it will hopefully encourage the Bank of England to cut interest rates in August – despite services rates remaining fairly high.
“This will help reduce costs and stimulate the property industry and the economy in general. It will also support our new Government’s growth plans – particularly around house building – that we will hear more about at the opening of Parliament later today.
“I suspect, however, that by the end of the year we’ll see a slight rise again in inflation – but then it will hit a downward spiral again during 2025.”
David Hollingworth, associate director at L&C Mortgages:
“The rate of inflation held steady at the Bank of England’s target rate of 2% in June. That is positive news and another month’s reading at the Bank’s target rate will buoy the hopes of those wanting a base rate cut sooner rather than later.
“However, many anticipated a further, even if slight, decline in inflation this month and the likelihood of an MPC decision to cut in August will remain in the balance.
“Although borrowers can still expect to see base rate fall this year, they should also be prepared for rates to be held a little longer.
“On the upside mortgage rates have been improving in recent weeks.
“A flurry of price changes is gradually helping to drag fixed rates down, albeit slowly. As long as today’s figures don’t disappoint markets, we should see that trend continue.
“Competition is fierce in the market which has seen lenders regularly edging rates back down, unwinding increases in recent months.
“Lenders often have little margin to play with, so any move in market rates can have an impact on fixed rate pricing in either direction.
“Today’s figures are not likely to add any additional boost to the recent cuts in mortgage rates but nor should they disturb the current level.”
Ben Thompson, deputy CEO, Mortgage Advice Bureau:
“Despite Taylor Swift and Coldplay’s best efforts, inflation held steady in June.
“This firmly opens the door for an August rate cut – the first since 2020.
“This is good news for buyers, but it’s important to remember that rates won’t fall off a cliff come August.
“Lenders have already priced in a cut for this summer, so now is the perfect time to get mortgage ready, speak to a broker, and see what your options are.”
