UK Inflation Reaches Highest Rate in 30 Years
Inflation continues to be a headache for both the Bank of England and the Chancellor with the news that it’s reached its highest peak in 30 years.
Prices are rising at 5.4%, up from 5.1% in November and continue to outpace income growth.
While inflation was at 0.6% in 2020, economists believe that it could go as high as 7% once energy price hikes are taken into account.
The last time it was at that level? March 1992.
With many experts now suggesting that it’s vital for the Government to step in with initiatives that can protect vulnerable consumers, it seems likely that interest rates will rise once again.
The Monetary Policy Committee meets for the first time this year on February 3, an event that many experts suggest will see interest rates increase from 0.25% to 0.50%.
Despite the rising cost of living, the UK’s blue chip index FTSE 100 has turned around a decline with positive company updates from Burberry and Pearson.
Likewise, the UK housing market continues to see strong growth with house prices increasing by 10% in the year to November 2021, up from 9.8% in October last year.
This translated to a £25,000 price rise on the same time last year and an average UK price of £271,000 by the end of the year.
For property investors, the prospect of rising interest rates is something to consider as part of their long-term strategy.
While higher interest rates might mean higher mortgage payments, it also means more people renting than buying.
For savvy landlords, this is the opportunity to gradually raise rents in line with the changing interest rates. A rise to 0.5%, for example, represents a minor increase when extrapolated over a year.
With a number of different UK locations forecasting price increases and rental growth, now is a better time than ever to consider a property investment in a key location.