The inflation rate in the UK is now below double digits – falling to 8.7% in April from 10.1% in March.

A welcome drop but below market expectation. What does the industry make of the latest figure?

Livemore managing director of capital markets and finance Simon Webb explains that high energy prices have played a big part in soaring inflation but that is now falling as are fuel costs.

“Hopefully, this is the start of inflation heading downwards towards the 2% target although high food prices may make is a slow journey.

“The big question is whether this fall in inflation is enough to stave off another base rate rise. Two out of the nine members of the Monetary Policy Committee voted for not increasing base rate at the last meeting so there is certainly appetite for no more rises.

He adds: “Of course, inflation is not the only consideration for setting base rate as the wider economic situation and cost of living crisis comes into play.

“Borrowers on tracker rates don’t want to see their monthly repayments go up yet again and UK Finance recently reported a rise in arrears and repossessions – clear evidence that more people are struggling.”

Phoebus Software chief revenue officer Adam Oldfield is relatively upbeat “We’re waking up to good news, at last.  Inflation falling into single figures is the news that we’ve all been hoping to hear and perhaps the start of things to come.

“Although it is the fall in fuel prices that is the major contributor to the current rate of inflation, we can’t underestimate the effect the fuel and energy prices have across the economy.

“If everyone is paying less for their fuel then the prices we pay for other goods and services should start to come down.  This virtuous circle is what we need to keep inflation going in the downward direction that the Bank of England is tasked with achieving.

“Of course, there is no guarantee that this will be enough to prevent the BoE from raising interest rates again next month.  However, the IMF has upgraded its forecast for the UK economy, which is a factor that usually has some bearing”.

He adds: “The housing market is showing huge resilience recently and the general sentiment appears to be positive.  The only fly in the ointment will be another interest rate rise. How lenders manage that, if they can see that inflation is going in the right direction, will be key.”

SPF Private Clients chief executive Mark Harris says: “Inflation is moving in the right direction, although more slowly than we would want to see and it is unlikely to be enough to stave off another rate rise”.

He continues: “Swap rates rose on the back of the inflation figures this morning and it is likely that more lenders will reprice their mortgages higher. We have already seen some volatility in pricing in recent days on the back of higher Swaps, which underpin the pricing of fixed-rate mortgages, with Santander and Halifax pulling rates. Other lenders are repricing upwards at short notice”.

AJ Bell head of financial analysis Danni Hewson sees little reason for optimism.

“I don’t think many people will be cracking open a bottle of reasonably priced sparkling wine this morning.

She adds: “With core inflation heading the wrong way it sets the scene for at least one more interest rate hike and looking at market expectation this morning it seems there’s speculation the Bank of England might go as high as a 5.5% base rate in order to complete its task”.