UK inflation set to rise with interest rates higher for longer, warns deVere
Energy-driven cost pressures expected to push inflation higher and delay rate cuts.
UK inflation is expected to rise again in the coming months, with interest rates likely to remain higher for longer, according to James Green, regional director at deVere Group.
The warning comes as inflation held at 3% in February, with the latest data reflecting conditions before a renewed surge in global energy prices linked to tensions involving Iran.
Green said: “Today’s UK inflation data reflects the period just before a renewed surge in global energy prices tied to escalating tensions involving Iran.
“Inflation is now, by almost all estimates, turning higher again.
“I fear that many households, businesses and investors could be underestimating the scale and speed of what’s coming.
“Energy prices are rising sharply, and that feeds directly into every part of the economy. Households, businesses and investors are all exposed.”
He said rising oil and gas prices, alongside disruption to supply chains, are creating a fresh wave of cost pressures across the UK economy.
Green added: “This is a broad-based inflation impulse driven by energy, and it’ll push up the cost of transport, food, manufacturing and daily essentials.
“Households should expect bills to rise again. Businesses should expect margins to come under pressure.”
Markets have already begun to reprice expectations for interest rate cuts, with the prospect of near-term easing diminishing as inflation risks build.
Green said: “Interest rates will, we expect, stay higher-for-longer. The idea of rapid cuts this year is becoming increasingly unlikely.
“The Bank of England will be unlikely to ease policy while inflation is accelerating again. Doing so would risk losing control of price stability.”
He added: “Mortgage costs will remain elevated, refinancing becomes more expensive, and disposable income is squeezed further as living costs rise.
“It’s a direct hit on household finances. Borrowing remains costly, and inflation erodes purchasing power at the same time.
“People need to take action now by reducing exposure to variable-rate debt, securing fixed terms where possible and strengthening savings buffers.”
Green also warned that businesses and investors face increasing pressure, with higher costs and weaker demand shaping the outlook.
He said: “Companies are being squeezed from both sides. Costs are rising while customers are becoming more cautious.
“Business leaders need to prioritise cost control, protect margins and ensure they have the liquidity to withstand a more volatile period.”
He concluded: “Today’s inflation data might have remained unchanged at 3%, but all indicators warn it’s set to rise again, and, therefore, interest rates will likely remain elevated.
“Those who act early to protect their finances, strengthen their businesses and position their investments will be far better placed than those who delay.”
Related
Atom bank reduces rates across residential range
Principality to increase mortgage rates by up to 0.18%
EXCLUSIVE: April Mortgages enhances Interest Only, adds options for over-50s
TSB to increase selected residential mortgage rates by 0.15%
Atom bank increases loan-to-income limits across Prime and Near Prime ranges
Darlington BS backs first-time buyer using pension income
Pivotal acquires LR Finance as buy-and-build strategy continues
The Mortgage Brain grows turnover 21% to £8m
TMA adds Monmouthshire Building Society to lender panel
HSBC cuts mortgage rates by up to 0.11%
Over one million borrowers could see mortgage payments rise by £283, study finds
