Industry experts are cautiously optimistic for a recovery in property shares following the announcement that UK inflation has more than halved from its 11.1% peak in October 2022.
The figures, released earlier today, have leant weight to the belief that interest rates, currently held at 5.25%, may also have peaked.
Marcus Phayre-Mudge, fund manager at TR Property Investment Trust, said: “Inflation now seems to be easing, allowing for guarded optimism that ‘peak rate’ may be upon us. Market cycles over the last 30 years have shown that when interest rates peak, property equities recover more sharply than the wider stock market. This recovery should be supported by the fact that unlike previous downturns, there are many property sub-sectors where demand remains strong.”
The fall in CPI from 6.7% to 4.6% is the biggest drop in the UK inflation rate since April 1992, the Office for National Statistics said, when inflation fell from 7.1% to 4.7%.
The prime minister claimed victory for his aim to halve inflation from its high last year.
“In January I made halving inflation this year my top priority,” he said. “Today, we have delivered on that pledge.”
The chancellor Jeremy Hunt said: “We are beginning to win the battle against inflation.”
But he cautioned that “there’s lots more work to do” to get inflation down to the target of 2%.
“That’s why next week will be an Autumn Statement for growth,” he added.
Shadow chancellor Rachel Reeves said: “Now is not the time for Conservative ministers to be popping champagne corks and patting themselves on the back,” as costs were still high and rising, and businesses were still suffering.
UK inflation is still higher than other comparable economies. Yesterday, US inflation dropped to 3.2%. Inflation in the eurozone is estimated to have fallen to 2.9% in October.
The UK fall was largely due to the drop in energy prices. The ONS reported that goods inflation dropped to 2.9%, from 6.2%. That was mainly due to cheaper energy – energy prices fell by 16% in the year to October.
Core CPI, which strips out energy, food, alcohol and tobacco, rose by 5.7% in the 12 months to October, an improvement on 6.1% in September.
Service sector inflation saw a much smaller fall, down from 6.9% to 6.6%, but even this was larger than expected.
The CPI fall is greater than that predicted by economists, which expected 4.8%.
To send feedback, e-mail piers.wehner@eg.co.uk or tweet @PiersWehner or @EGPropertyNews
