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UK inflation decreases pause in September

UK inflation pauses at 6.7% in September but shows signs of future decline, while rising wages provide some hope in the cost of living crisis

A photo of Dom Limberg, the author

By Dom Limberg

Published on: 20 October 2023

4 min read

UK inflation decreases pause in September

According to recent reports from the Office for National Statistics (ONS), September is the first month since February 2023 that inflation has failed to decrease. Though this may feel like disappointing news, UK Chancellor Jeremy Hunt has assured economists that inflation should continue to fall this year if government plans are followed.

We were all happy to see inflation in the UK beginning to drop this summer following extremely high levels over the last 12 months. Inflation has contributed significantly to the current UK cost of living crisis, so seeing it start to decrease in February was welcome.

I’ll admit seeing the decreases stall like this will be frustrating for many people, who simply want this cost-of-living crisis brought under control. Though it’s not great news to hear, the UK is still in a much better position with inflation than we were at the start of this year.

QUICK SUMMARY – UK inflation decreases pause in September

September has marked the first time since February 2023 that UK inflation has failed to fall. While this isn’t ideal news, this doesn’t mean that inflation is definitely on the rise again.

  • The UK’s current rate of inflation sits at 6.7% (which is significantly higher than the goal rate of 2%). It is however a significant improvement on this time last year (October 2022) when rates hit 11.1% following the chaos of Liz Truss’ autumn ‘mini budget’.
  • Inflation is not always going to fall in a straightforward way and so it may not decrease again soon – or it’s possible it could rise slightly before continuing to fall.
  • With interest rates being so tightly linked with inflation, inflation related news tends to have an impact on the UK mortgage industry. If you’re worried about your mortgage or just need some advice, we’d recommend talking to an independent mortgage broker.

The UK’s current inflation rate has stuck stubbornly at 6.7% in the 12 months up until September 2023. This is a slight decrease from the 6.8% inflation seen in July and is admittedly much lower than the highest recent rate of 11.1% in October 2022.

When will inflation go down in the UK again?

Things have been looking positive in terms of inflation within the last few months with slow but steady decreases right until September. it’s hard to say exactly when rates will go down again though Chancellor Jeremy Hunt has stated he is optimistic that this will happen.

As Jeremy Hunt put it, ‘inflation rarely falls neatly in a straight line’. This means we may see inflation continue to hold at its current rate or even increase slightly again before falling. The ideal rate of inflation for an economy is 2%, so there is still a lot of work to be done to reduce the UK’s rate to that level.

How is inflation affecting UK mortgages?

Inflation and interest rates are tightly linked, so changes to one can affect the other. At the moment, interest rates are holding steady with no increases since July. The Monetary Policy Committee’s meeting in September led to a vote for a Bank of England interest rates to remain at 5.25%. This followed on from 15 consecutive interest rate rises and was a definite relief to consumers across the country.

5.25% is still a very high base interest rate compared to low rates in previous years, so while this rate is lower than it has been there’s still a way to go. In generally good news for consumers and those looking to buy, wages in the UK have increased on average this year to place them above inflation. This is the first time that this has happened in nearly two years.

Wages have increased annually at a rate of 7.8% (seen between June and August 2023) and this was higher than the rate of inflation was over that same time period. This is definitely a good indication of the UK economy slowly beginning to recover, following the effects of the pandemic and last year’s disastrous autumn mini budget.

So while interest rates are still higher than we may like, wages increasing should help with people who are paying of credit arrangements such as mortgages. It was also recently reported that the number of 35 year mortgage approvals has increased, presenting good opportunities to buy for those who want to repay over a longer period.

If you are worried about your mortgage and need some free advice, you can speak to our trusted mortgage partners for help and guidance.

More home and mortgage news

Here we have more of the latest financial news affecting homes and mortgages in the UK.

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