Inflation falls to 3.9% – consumer credit industry reaction

Latest Office for National Statistics (ONS) data showed that inflation was down to 3.9% in November, from 4.6% in October, the lowest rate since September 2021, the fall was largely thanks to declines in motor fuel prices and recreation costs and a slowdown in food and drink inflation.

David Cheadle, Acting Chief Executive of the Money Advice Trust, the charity that runs National Debtline, said “This latest drop in inflation is welcome – but for millions of households the pain caused by sustained high prices is set to continue.”

“Our findings show the scale of the impact with 6.5 million people struggling to heat their homes as much as they need this Christmas.  With energy prices rising in January and energy arrears at a record £2.9 billion, for the millions of people trapped in debt, the situation is only going to get harder.”

“I would urge anyone worried about money this Christmas to speak to National Debtline as soon as possible. Dedicated support is also needed urgently to support people in unaffordable energy arrears. The Government must act by bringing in a temporary Help to Repay scheme via payment matching and write off.”

Andy Mielczarek, Founder and CEO of SmartSave, a Chetwood Financial company, said “The signs are that the battle against inflation is slowly being won. People will breathe a sigh of relief this Christmas as a result, grateful for a little respite from the cost-of-living crisis. But it is in January – when people’s financial planning tends to come into sharper focus – that we are likely to see the combination of falling inflation and steady interest rates truly take effect.”

“For much of the past two years, money in savings accounts was losing value in real terms due to increasing inflation. Now, the situation has been reversed, with inflation falling below the base rate, affording those keen to save or invest their money the opportunity to reconfigure their financial strategies.”

“But timing is everything, with a chance the base rate will fall in 2024. Moreover, seeking out the best returns requires people to carefully consider the products and providers they go with – many banks are still failing customers with paltry returns, so once the Christmas shopping is finished, it’s important people shop around for the best options to make their savings work harder for them.”

Katie Pender, Managing Director of Target, said “Today’s inflation figure is better news than expected and we are seeing progress towards the Government’s target of 2%. This may be due in part to the positive effects of the Bank of England’s increases in interest rates trickling through.”

“Will borrowers start to feel more confident now that inflation and mortgage interest rates are falling? While these headlines offer hope, many homeowners are yet to come off historically low fixed rates and move to higher rates. Affordability will remain a major challenge. In addition, the housing crisis continues, with not nearly enough homes being built. The Home Builders Federation revealed earlier this week that the number of planning permissions being granted for new homes has fallen to another record low.”

“As an industry we can help lenders and borrowers by providing a service based on fast and reliable technology systems that put the customer first.”