Inflation is rising and has gone back above the Bank of England’s 2 per cent target, figures are expected to show this week.
The news will deal the Government another blow as the economy flatlines and lenders raise mortgage costs – despite recent interest rate cuts.
Barclays and NatWest are poised to be the next High Street lenders to increase their fixed mortgage rates, following similar moves by Santander, HSBC, Nationwide and TSB.
Going up: The Bank of England expects inflation to rise to around 2.75 per cent before falling again
They are hiking the cost of home loans because financial markets expect borrowing costs to stay higher for longer over the next five years. Experts also fear inflation has not been tamed.
Consumer prices are expected to have risen by 2.1 per cent last month, compared with 1.7 per cent in September, mainly driven by higher gas and electricity costs after the energy price cap, which sets unit prices, was raised.
The Bank of England expects inflation to rise to around 2.75 per cent in the second half of 2024, before falling again.
Chancellor Rachel Reeves’s tax-and-spend Budget will also add to inflationary pressures, reducing the likely pace of further interest cuts. Reeves also said she was not ‘satisfied with the numbers’ on growth.
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