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Industry reacts to latest CPI figures

Jake Carter

February 17, 2021

The latest inflation figures are benign at best according to Martin Stewart, director of The Money Group.

The Consumer Price Index (CPI) rose to 0.7% during January from 0.6% in December.

The index shows that the number of deals able to outpace inflation has fallen due to a rise in inflation of 0.10%.

Stewart said: “I certainly wouldn’t be reading too much in to the figures until we start to see them come with a one in front of them, and then only if it seems to be a real trend of upwards price pressure.”

Stewart went on to explain that most economies run with some inflation in the system, and with the “government being the biggest debtor in the UK, I don’t think they will be too concerned about a mechanism that erodes some of that debt away”.

He added: “But if, due to a combination of Brexit and COVID-19, we start to see some significant inflationary pressures all the attention will be turned to the Bank of England to see whether that will be the trigger for them to start increasing the cost of borrowing.”

However, Stewart believes that in itself will bring back increased taxation and subdued consumer spending.

Sarah Tucker, founder of The Mortgage Mum, said: “In normal times a CPI figure that low would probably lead to weakness in the property prices, but we are not in normal times due to COVID-19, stamp duty waivers, temporary VAT cuts and unprecedented support from the government.”

Therefore, Tucker believes that the real question is what follows once government support stops, stamp duty holiday ends and taxes are increased.

Tucker noted that the CPI figure does not show that the country is in lockdown.

She said: “It is skewed in general right now as people’s spending habits have completely changed year-on-year due to COVID-19, with more being spent on furniture and household goods, plus home improvements.”

John Goodall, chief executive of Landbay, added: “The fact that we have had inflation of 0.6% in December when prices normally drop shows that underneath the lockdowns, consumer appetite to buy both houses and goods is incredibly strong.

“The rise in the amount of rent tenants have been paying in the private rental sector is also rising.

“ONS figures show a steady annual increase each month of between 1.4% and 1.5% and this is also backed up by the latest CPI inflation data.

“Between July and December 2020 rent rising contributed 0.12% to overall inflation, up from 0.09% from April to June.”


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