Delayed effect on loan rates.

Experts are warning that some of the recent changes to inflation and interest rates could take time to show their full effect.

For example the recent drop in inflation is being attributed to falling energy prices and lower consumer spending, but some commentators are warning that other factors are yet to take effect and the underlying inflation rate could well be higher. They say that a summer price war in the supermarkets is artificially skewing the figures.

Another point of view is that the recent series on interest rate increases, meaning higher mortgage payments for many people have not yet shown their impact. Consumer spending is expected to drop, with households having less disposable income and once households realise how little cash they have, high street spending will drop further and inflation could fall again.

So it seems that the Bank of England is waiting for the increases to take effect and if it has overdone the increase it may be forced to drop rates again to re-adjust.

All this switching around is making life fairly complicated for UK families who see their household budgets changing every month and never knowing if they are set to remain stable for a while.

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