Inflation rise sparks fresh interest rate speculation

21-Mar-2007

In news which could interest would-be first time buyers, the UK's rate of inflation grew again last month, research has revealed.

Last month, the rate of inflation grew to 2.8 per cent under the consumer prices index; air fares and consumer price increases are thought to be largely behind the rise, which could leave potential first time buyers wondering if interest rates are going to be increased next month.

"Housing market activity still appears to be at relatively elevated levels and it seems that the cumulative 75 basis points increase in interest rates enacted so far since last August is yet to have a major dampening impact on activity," said Howard Archer from Global Insight.

According to data published by the Office for National Statistics, consumer prices rose by 0.4 per cent last month.

In related news, earlier this month the Bank of England's monetary policy committee voted by eight-to-one to keep interest rates on hold.

To find out about the different ways of financing a first home, see our section ‘Affording Your First Home’.

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