Credit, Collections & Insolvency News
Latest data from the ONS has found that CPI inflation fell to 3.4 per cent in February, confirming the fastest 12-month fall in inflation since 1978 and bringing inflation to its lowest level since September 2021
Commenting on the inflation figures for February, David Cheadle, Chief Operating Officer at National Debtline, said “This fall in the rate at which prices are increasing is welcome, but the challenges facing millions of people already struggling are far from over.
“With energy arrears at record levels, and higher council tax bills now landing on doormats, for many households it will feel like there is no end in sight to the financial pressure they are under. Without further support, more people will face unaffordable debts.
“The Government’s six-month extension to the Household Support Fund, announced in the Budget is welcome, but a longer plan is needed for struggling households including a Help to Repay scheme for people in unmanageable energy arrears.”
Simon Webb, Managing Director of capital markets and finance at LiveMore, said “While it is encouraging to see some movement in the right direction for inflation, at 3.4% it’s unlikely to inspire any U-turns on tomorrow’s MPC decisions. They will want to see a prolonged and consistent drop in inflation before reducing the Base rate which will, unfortunately, be too late for many of the homeowners looking to remortgage this year.
“CPIH – which includes owner occupiers’ housing costs – rose by 3.8% in the 12 months to February 2024 which, although healthier than the 4.2% rise in January, will still cause concern, with housing, household services, and motor fuels spurring the largest upward contributions to both CPIH and CPI rates.”
James Smith, Research Director at the Resolution Foundation, said “The fastest fall in inflation for almost half a century will be welcome news for households – with food inflation falling to its lowest rate in two years – and the Bank of England, as inflation looks on track to hit its 2 per cent target in April.”
“Services inflation also continues to fall which, coupled with falling nominal wage growth, should give monetary policy makers more confidence that wage pressures on inflation are starting to ease.”
Sarah Coles, Head of Personal Finance at Hargreaves Lansdown said “We’ve been released from the grip of inflation, and the squeeze has finally eased a little. After falling to 3.9% last November, inflation briefly tightened its grip on our finances again, so it’s a relief to see it ease in February. Unfortunately, this doesn’t mean life is getting any less expensive, it’s just getting more expensive at a slower pace, and while we expect to see inflation keep falling – it isn’t letting go of us just yet.
“Part of the February flop is down to the fact inflation surged a year earlier, by 1.1% in a month – to 10.4%, which is what we’re comparing prices to today. A year ago, food inflation was 18.3%, whereas now it has dropped for the 11th consecutive month to 5% – feeding lower inflation. As anyone who has been to the supermarket knows, this is very different from prices actually dropping. A handful of items are falling, including milk, cheese, butter, fish and jam. However, more generally, price rises have been baked into things like staff costs and manufacturing, so food and drink is just getting more expensive more slowly. More than nine in ten people have noticed their food bills rising in the past month, and two in five are buying less food to make ends meet.
“Energy prices are also significantly less painful. Last February, the energy price guarantee was in place at £2,500 – well ahead of the cap today. Back then, electricity prices were up 66.7% in a year and gas up 129.4%. Right now, energy prices are down on the year, with electricity down 13% and gas down 26.5%, which has had a major impact on inflation. Along with transport costs, it’s the one major category of CPI which was negative over the year. However, energy bills are still significantly higher than they were before the pandemic. Still two in five people find it difficult to pay energy bills – and 3% are behind on payments.
“It’s worth highlighting that the CPIH index differs from CPI quite significantly when it comes to housing costs, because it also includes rents – which has put upwards pressure on the other measure of inflation. CPI doesn’t look at housing costs, so this impact isn’t showing up in the data.
“Petrol prices have risen slightly, in contrast to falls last year. So, although diesel prices are 10.8% lower than this time last year and petrol is down 3.9%, it’s putting some upwards pressure on inflation. This was partly offset by falls in second hand car inflation, for the seventh consecutive month, now the pandemic boom has run its course.
“Hotel and restaurant price inflation eased a little, up 6% in a year. They have been off to the races, as staff costs, food prices and energy prices have conspired to make running these businesses increasingly expensive. Prices are still rising quickly – just a bit less so. There are some big variations within this category too, with hotel prices up 4.5% in a year and campsites, holiday centres and youth hostel prices up 17%.”
