It was revealed today (22 May) that UK inflation has dropped to 2.3%, a smaller decrease than the 2.1% predicted by economists – how will this affect dentistry?
The inflation rate is down from 3.2% in March, but falls short of the Bank of England’s target of 2%. Prime minister Rishi Sunak said that this is a ‘major moment for the economy’ as it is the closest to the 2% target that inflation has been since 2021.
We heard from Iain Stevenson, head of dental at Wesleyan Financial Services, on what this announcement could mean for dentistry.
‘[Almost] hitting the government’s 2% inflation target will be welcomed by dentists, helping to mitigate everyday financial pressures,’ he said.
‘Importantly, it clearly strengthens the case for the Bank of England to cut the interest rates in June, which is promising news for dentists, particularly when it comes to relief on mortgage rates. This could also lead to the cost of debt falling in the future, which will benefit those looking to secure financing or expand their dental practices.
‘However, the bank has been clear that it wants to see inflation settle at or around its target before it acts on rates, so we may need to wait a little bit longer for it to confirm that this isn’t just a flash in the pan.’
‘Optimistic’
This comes as the Bank of England announced earlier this month that interest rates will be held at 5.25%.
The Monetary Policy Committee voted seven to two in favour of keeping the rate the same. This is the sixth time in a row that the rate has remained at the 16-year high of 5.25%.
However, the bank also suggested that cuts are likely in the future – even as early as next month.
Bank of England governor Andrew Bailey said he was ‘optimistic’ that inflation would continue to decrease. He said: ‘We’ve had encouraging news on inflation and we think it will fall close to our 2% target in the next couple of months.
‘We need to see more evidence that inflation will stay low before we can cut interest rates. I’m optimistic that things are moving in the right direction.’
Bailey added that reduction to the cost of borrowing in June was ‘neither ruled out nor a fait accompli’.
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