The hotly anticipated the consumer price index (CPI) has just been released revealing that inflation fell to 2.3% in the year to April.

It marks a significant drop from 3.2% in March, according to the Office for National Statistics, and is the lowest level in almost three years.

However, this morning’s CPI was expected to fall to 2.1% for April on an annual basis, according to several forecasts.

Looking a bit closer at the latest figures from the Office for National Statistics, falling gas and electricity prices were a big part of the reason behind the sharp fall in April’s inflation number.

It comes after the energy price cap was lowered by the watchdog Office of Gas and Electricity Markets (Ofgem).

According to the latest data, prices of electricity, gas and other fuels fell by 27.1% in the year to April – the biggest fall since records began being kept in 1989.

Mortgage holders, house hunters, City experts and millions of other borrowers and savers are waiting for key indications on the timing of the first rate cut of the post-Covid era.

The Bank’s outgoing deputy for monetary policy, Ben Broadbent, said this week that a cut could come “some time over the summer” if “things continue to evolve” with the economy as the MPC expects.

City experts point to today’s CPI as a milestone on the road to the first cut since 2020 when the next MPC meeting takes place in June.

Tom Bill, head of UK residential research at Knight Frank commented, “For anyone buying a property or re-mortgaging, today’s inflation data is not great news. Stubborn services inflation is pushing the prospect of the first rate cut since March 2020 further into the distance, which will keep upwards pressure on mortgage rates. Combined with rising supply and a wave of owners rolling off sub-2% mortgages, it will maintain downwards pressure on house prices.”

Emily Williams, director of research at Savills, commented: “Today’s inflation figures will give the markets more confidence that a cut to the base rate is on the horizon. If this feeds through into mortgage pricing, we expect to see transactional activity start to pick up as it did at the start of the year. Mortgage affordability is the largest challenge currently facing buyers, with mortgage approvals in March 2024 23% below the pre-pandemic norm.

“Political and economic uncertainty means buyers will likely remain cautious, but the overall outlook has certainly improved, pointing to relatively modest house price growth this year. Savills revised forecast expects house prices to grow 2.5% in 2024.”

Ben Thompson, deputy CEO at Mortgage Advice Bureau, added: “Inflation in April being just 0.3% above the Bank of England’s 2% target could be the spark to light the fire of the housing market. With inflationary pressures slowing closer to levels that the Bank of England are likely to be happy with, swap rates will fall further, and therefore those remortgaging or buying will see rates fall as a result. As we edge closer to a transformative period in the housing market, now is the time to speak with a broker and get mortgage ready.”

*This article was updated at 7.23am

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