Rates peak confirmed by lower inflation

Interest rates have almost certainly reached the top of their current cycle now that inflation has fallen from 1.9 per cent to 1.8 per cent, analysts have suggested.

The Office of National Statistics has revealed that consumer price inflation fell to 1.8 per cent last month, though core inflation rose slightly to 1.8 per cent.

The CPI has not been lower since February 2005, and with interest rates still at a six year high of 5.75 per cent, firms such as Global Insight are now confident that rates have peaked at their current level.

The ONS has said that lenders' obligation to cut administration fees had contributed the single biggest decrease in prices over the month, though Capital Economics noted that the news did not make it a certainty that rates would fall in the near future.

"Overall, another pleasant surprise. But not a green light for a rate cut," the firm noted in a statement.






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