Rate of inflation is finally falling – what that means for you

This morning we discovered that the rate of inflation fell to 3.6% last month, which is certainly good news for households (and Rachel Reeves, I’m sure).

The measure of inflation that is being used – Consumer Prices Inflation (CPI) – had remained stubbornly fixed at 3.8% for the previous three months. It’s still above the Bank of England’s 2% target, but it will probably be enough of a sign that inflation is slowing to nudge the Bank of England into lowering interest rates at their next Monetary Policy Committee meeting on December 18th.

What does that mean for you? If you’re looking for a mortgage, it means it’s probably best to hang on as rate cuts could be on their way (although some lenders are already lowering rates, probably in anticipation of upcoming Bank of England cuts). If you’re a saver, keep checking you’re getting the best interest rate possible. And fix your rate if that works for your life and financial goals (i.e. you don’t need to get access to that money for emergencies). By fixing, you could lock in better rates before they start to fall. If you don’t want to be locked into a fixed rate, then there are still some excellent variable rates on offer. You can find our Best Cash ISA recommendations here and our Best Cash Savings Accounts recommendations here.

But, we also wrote this summary for the Daily Express:

“The top rate right now is available on Zopa. If you open a Biscuit current account, you’ll get access to their Regular Saver account paying a massive 7.10% AER (variable). As with most regular savings accounts, there are limits to how much you can put away this way (£300 per month maximum in the case of Biscuit) but there are no fees for either the current or the savings account, and you can get access to your savings at any time which is vital if you’re using this as an emergency cash fund.

If you want to put a bit more away, Santander is offering 6% AER (variable) on up to £4,000, but you’ll need to open a Santander Edge current account – which costs £3 per month.

You can save up to £1 million with Oxbury Bank and receive 4.51% AER on their 90-day-notice base rate tracker account. But you will need a minimum deposit of £10,000, and this does track the Bank of England base rate so if interest rates are cut in December, as is now widely expected, your rate will drop too.”