Despite this fall in the pace of cost increases, The Consumer Prices Index (CPI) still rose, which means prices are continuing to go up.
But they are rising at a slower rate than before and by less than some pundits expected.
What it means for borrowers?
Inflation easing is good news for mortgage borrowers because it moves us towards an economic environment where Base Rate cuts are more likely.
That’s not to say they are expected immediately – they’re not – but we could be heading for interest rate cuts later in the year.
Alice Haine, personal finance analyst at wealth manager Bestinvest, explained: “While rate cuts won’t happen just yet, the fact that inflation is easing down, rather than heading in the opposite direction, bodes well for the future as fixed rate deals are typically determined by the interest rate outlook rather than what the base rate is today.
“If inflation continues to ease, a summer rate cut would deliver a big boost to first-time buyers looking to get onto the property market and existing homeowners about to roll off an existing deal.
“However, existing homeowners on long-term products secured before the BoE began its aggressive rate-hiking cycle in December 2021 are likely to face higher repayments as rates will still be much higher than they were when they took out their current deal.”
David Hollingworth, associate director at L&C Mortgages, added: “Fixed rates have been nudging back up in the last month after rates dropped sharply in the early part of the year. The Bank of England has been holding firm to its promise to only cut rates once it has inflation under control.
“Today’s figures aren’t likely to shift that position and base rate will be odds on to hold tomorrow.
“Borrowers coming to the end of a deal are still thankfully looking at rates substantially lower than available last summer. The recent increases seem to have eased in pace and hit a level, with some deals even occasionally being slightly nibbled back.”