PwC comments on the latest inflation and house price data

Jing Teow, senior economist at PwC, comments on today's inflation data:

"Today’s inflation data showed headline consumer price inflation declining slightly to 0.9% in April from 1.5%, driven by falling energy and motor fuel prices. Over the 12-month period, housing and household-related costs continued to exert downward pressure on prices."

"Lower energy and fuel costs are likely to have been driven by a combination of Ofgem’s energy price caps, which applied from April, as well as by the recent sharp decline in global oil prices caused partly by weak global demand as social distancing measures reduced domestic energy and fuel needs." 

"There could still be considerable economic turbulence over the next few months. The unique circumstances of COVID-19 mean that demand in some sectors will be lower than usual but for other sectors it will be higher than normal. The gradual pick up in demand as social distancing measures are lifted could reduce some of the spare capacity in the economy. In areas like energy and fuel, OPEC measures to cut oil supply, combined with a gradual increase in energy demand from reopening production, could contribute to this upward price pressure."   

Jamie Durham, economist at PwC, comments on today's house price data:

"Today’s release from the ONS shows that house prices in the UK increased by 2.1% in the year to March 2020, up from 2.0% in February.

“The distribution of price growth across regions was noticeably different to recent months. House price growth was highest in London, up 4.7% on the year before, which is the fastest rate of growth since December 2016. This strong rate of growth could be, in part, the result of greater consumer confidence following the General Election and completion of the Brexit withdrawal agreement."

“However, it is important to take the figures with a pinch of salt. These data show how the housing market fared in March, when the government introduced lockdown and effectively suspended the housing market. The ONS reports that transactions were lower than expected, and so the figures are likely to be more volatile than normal."

“Looking ahead, Covid-19 has re-introduced considerable uncertainty into the economy. Although the Government has now lifted most of the restrictions on the housing market, we would expect the market, and in particular transactions, to remain subdued over the coming months.”    

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