Inflation Rate Falls

The Inflation rate had fallen back to 3% from 3.5% in February, the government has announced.  This drop in the Consumer Price Index rate supports the official view that the CPI will fall throughout this year back to its target of at, or below, 2%.  This will no doubt help the Chancellor in his last minute pre-budget tweakings.

This also helps the likelihood of extending the very low interest rates currently being experienced by the mortgages of the home-owning section of the population, thereby helping the property market in a small way.  The RPI (Retail Price Index) which includes housing costs stayed at 3.7% for the month, and the core inflation (which excludes energy and food prices) dropped from 3.1% to 2.9%.

The economy’s reaction to tomorrow’s budget, past budgetary tax changes coming into force, and the forthcoming election, will all affect the medium term stability and consolidate recent improvements in the property markets, in a more direct way than inflation at the current time. However every positive improvement should be enjoyed.

23rd March 2010