UK inflation remains at 2.2% in August, the latest Office for National Statistics data shows, dampening lingering hopes of a base rate cut tomorrow.

The largest upward contribution to the monthly change in general prices came from air fares, which rose this year but fell a year ago.

Meanwhile, the largest offsetting downward contributions came from motor fuels, and restaurants and hotels.

At the start of August the Bank of England lowered the interest rate from 5.25% to 5%, after 14 consecutive increases.

During the last Monetary Policy Committee meeting, it was noted that they expect inflation to increase to around 2.75% in the second half of this year.

The next MPC meeting is scheduled for tomorrow, and economists expect bank rate to remain unchanged.

But the market is still looking towards two cuts by the end of the year.

Mortgage Advice Bureau deputy chief executive officer Ben Thompson says: “The Bank of England had been hoping inflation would drop, but in recent months this has proved a little tricky.

“For homeowners and would-be buyers, thankfully this hasn’t resulted in noticeable increases to swap rates, and thus mortgage rates have remained steady and some have even reduced slightly.”

“Some mortgage rates are now as low as they were before the infamous mini-budget of 2022, and though these cheap rates are mainly for those with larger deposits, the market is improving across all sectors.”

L&C Mortgages associate director David Hollingworth states: “Inflation holding steady at a rate of 2.2% may sound underwhelming but is likely to be viewed positively. It was in line with forecasts so shouldn’t create any waves in what the market expects, and the Bank of England has already signalled that it expects inflation to rise as the year progresses.”

“So, although above the target rate of 2%, today’s stable figure shouldn’t alter the expectations that we could see another rate cut before long.”

“That is not thought likely to come in tomorrow’s MPC announcement and the decision to cut last month was finely balanced at 5-4 in favour. However, it shouldn’t undo any of the progress in mortgage rates which have once again been shifting rapidly as lenders have cut their fixed rates with gusto.”

“That’s seen some substantial improvement in the available mortgage options with two-year fixed rates now joining the five-year deals below the 4% barrier. The level of competition between lenders remains intense and they’ve continued to reprice regularly to try and keep up with peers. That will help to keep rate improvements coming for mortgage borrowers, as the focus shifts to the base rate decision tomorrow.”

Propertymark chief executive officer Nathan Emerson adds: “The positive news from today’s figures is that inflation remains broadly in line with the Bank of England’s target of two per cent, which means that people shouldn’t witness the uncertainty and rapid price rises experienced in 2022 and 2023.”

“The combination of inflation sitting within bounds and any further cuts in base rate over the coming months has the potential to bring a new wave of confidence and affordability within the housing market.

“However, most importantly, it brings much welcome relief and financial flexibility to many households compared to only six months ago.”