The industry has warned there is still a rocky road ahead despite UK inflation falling from 7.9% to 6.8%, its lowest level since February 2022.

The latest Consumer Price Index (CPI) figures, released by the Office for National Statistics (ONS) today, have given some cause for optimism.

However, it is still considerably higher than the government’s target of 2% and there are fears the latest drop might not be enough to prevent the country slipping into a recession.

Some also believe rising wages and petrol prices have the potential to push inflation back up again next month, while many think the Bank of England will increase the base rate again in September.

Core inflation, which strips out the price of energy, food, alcohol and tobacco, remained the same at 6.9%.

Phoebus Software chief revenue officer Adam Oldfield says: “Prices at the petrol pumps have been going up this month which, along with rising wages, has the potential to push inflation up again next month.

“With this in mind the Bank of England is highly unlikely to veer away from its current path, and another base rate rise is likely to be on the horizon.

“For the housing market and mortgagers in particular this would be another blow, especially when we are already seeing arrears increasing.

“The recent rate cuts on fixed rates has given a bit of hope for some I’m sure, but there seems no respite for those that now find themselves on SVRs.

“Lenders will need to be canny to meet their lending quotas in the last few months of the year as borrowers face the dilemma of whether to fix now or wait.”

Meanwhile Knight Frank’s head of UK residential research Tom Bill says it has been ‘a week of mixed signals for the UK property market’.

“Falling headline inflation suggests a faint light at the end of the tunnel but stronger than expected wage growth and core inflation indicates the Bank of England will believe its work raising rates isn’t quite done yet,” he says.

“Some lenders are cutting rates, but for anyone buying, selling or re-mortgaging, it shows the upwards pressure on mortgage rates hasn’t gone away.

“That said, demand in the property market will continue to be supported by wage growth (which is now outpacing inflation), lockdown savings, the availability of longer mortgage terms, lender flexibility and the popularity of fixed-rate deals in recent years.

“We don’t expect a cliff-edge moment for prices but they will continue to come under pressure in the short term along with transaction volumes.”

Shojin chief executive Jatin Ondhia says: “It’s good news today, but there are strong rumours that next month’s data will show a rise in inflation once again.

“This story is far from over – Rishi Sunak and Jeremy Hunt’s target of bringing inflation under 5% by the end of the year is looking increasingly out of reach, and that will have implications on consumers, investors, businesses and the financial markets.

“Even with today’s fall, inflation remains high, and if indeed it does rise again next month, we have to expect the Bank of England to come hard with more interest rates hikes.

“As borrowing becomes more expensive, this will inevitably further impact house prices and property development.”