Inflation held steady in June, with the latest figures from the Office for National Statistics (ONS) showing price growth remained at the Bank of England’s target rate of 2%.
Commenting on the data, Matt Hartley, Director of Engagement at the Money Advice Trust, the charity that runs National Debtline, said “Millions of people are still struggling, despite lower inflation, as the fallout from the cost of living crisis continues to impact household budgets.
“Our advisers at National Debtline hear every day from people who don’t have enough coming in to cover their essential costs, like energy or rent. This is the situation for 2 in 5 of the people we help, and more than half of the small business owners who reach out to us for advice.
“The new Government needs to prioritise support for households in difficulty, including helping people with unmanageable energy debts through a Help to Repay scheme, and improving the support offered by Universal Credit.”
Andy Mielczarek, Founder and CEO of Chetwood Financial, said “After years spent hiking the mountain of inflation, it’s good to be back on solid ground. Inflation is finally under control, and this gives Britain a platform to begin rebuilding itself, putting behind the challenges of the past two or more years.
“It will be interesting to see how quickly interest rates fall, and by extension how much confidence the Bank of England has in the rate of inflation, but for the moment we can enjoy some long-awaited stability.
“However, while rampant price rises have been curbed, the cost of living is still at a dangerously high level and other strains still impact the daily lives of people throughout the country. There is more to be done to improve Britons’ financial well-being, and banks will play an important role in ensuring they have the right tools to make their lives and finances more secure.”
Simon Webb, Managing Director of capital markets and LiveMore said “Inflation has held at 2% in June, remaining at the Bank of England’s target. 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.”
Stuart Cheetham, CEO of MPowered Mortgages, said “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 ratesetters 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.”
Richard Carter, CEO of Lenvi said “Inflation staying at 2% is welcome news for consumers and businesses after nearly three years of above-target price rises. With inflation now less than a quarter of its June 2022 rate (ONS), Brits may be more motivated to make bigger purchases, such as cars or buying a house. Our latest data on borrowing habits found that four in five Brits were likely to switch their mortgage deal this year, compared to three in five in 2022. With mortgage deals set to improve as a result, lenders will be acting fast to ensure their rates remain competitive and continue to draw in those new customers who can finally claw their way to home ownership.
“Our research also found that over a quarter of people (26%) have borrowed money to make their month-to-month costs more manageable. While we hope to see this ease over the coming months, the volume of people still relying on borrowing to cover basic living expenses shows an ongoing need for swift action and support in the lending sector.”
James Smith, Research Director at the Resolution Foundation, said “Inflation remained at 2 per cent but showed signs of ‘stickiness’ as more domestically-driven services inflation remained at 5.7 per cent.
“While it is welcome news that inflation is at the Bank of England’s 2 per cent target, the high price of essentials – with energy prices up by 53 per cent since July 2021, and food prices by 31 per cent – will be with us for the foreseeable future.
“The combination of a sustained high price level, continued uncertainty about the size and timing of Bank of England rate cuts, and sticky services inflation means that families will continue to feel the effects of the high cost of living.”