The Consumer Prices Index (CPI) measure of inflation has fallen back from 10.1% to 8.7% in April. This is the first time in eight months it has recorded single digits.
Overall the latest headline figure is higher than market forecasts, this was estimated to be between 8 and 8.5 per cent.
Danni Hewson, head of financial analysis at AJ Bell, said: 'With core inflation heading the wrong way, it sets the scene for at least one more interest rate hike'.
'Looking at market expectation this morning it seems there’s speculation the Bank of England might go as high as a 5.5% base rate in order to complete its task'.
Rob Morgan, chief investment analyst at Charles Stanley, said: 'With groceries in particular showing little response to the Bank of England’s twelve successive interest rate rises, today’s figures could well seal a further increase in interest rates at the monetary policy committee’s next meeting on 22 June from the current level of 4.5%'.
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