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Good for mortgages, bad for food prices

November 20, 2025
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Kevin PeacheyCost of living correspondent

Getty Images Man stands in his kitchen with two shopping bags and holds tomatoes and a receipt in his handsGetty Images

Walk around your local supermarket and you’ll struggle to find much that’s healthy for your finances on the shelves – food price rises are accelerating.

The cost of the weekly shop is, and will continue to be, a worry for millions of people.

Beyond just food, prices of goods and services in general are going up, but the rate of those price rises has slowed.

And that is likely to bring better news for the cost of borrowing, in particular mortgage rates for homeowners and first-time buyers.

Are prices going up or down?

Prices pretty much always rise. Official statistics chart the movement in the cost of hundreds of goods and services in the UK.

It is the rate of increase that is crucial, and that inflation rate is published every month by the Office for National Statistics (ONS).

On Wednesday, the ONS said the rate of inflation had fallen to 3.6%, which means prices are rising more slowly than they were and will foster hope that inflation has peaked.

A line chart titled 'UK inflation dipped to 3.6% in October', showing the UK Consumer Price Index annual inflation rate, from January 2020 to October 2025. In the year to January 2020, inflation was 1.8%. It then fell close to 0% in late-2020 before rising sharply, hitting a high of 11.1% in October 2022. It then fell to a low of 1.7% in September 2024 before rising again. In the year to October 2025, prices rose 3.6%, down from 3.8% the previous month.

Delve a little further into the data, and there are more details about what is behind the latest trends.

For example, fish, vegetables, chocolate and confectionary were among the products that rose in price, although fruit prices fell slightly.

Recent research by the Bank of England found that people on average are still buying the same amount of food, but paying more for it. That said, they are changing the way they shop.

“Concerns about rising food costs and utility bills still dominate conversations,” it said.

“Households continue to change their shopping habits to reduce spending, such as buying more vegetables and reducing meat consumption.”

Getty Images A shopper holds a packet of beef mince in her hand in front of a supermarket shelf.Getty Images

“Staples like bread, meat and potatoes all cost more than they did even a month ago,” says Danni Hewson, head of financial analysis at investment platform AJ Bell.

But she does point to a silver lining – the dip in the inflation rate means the Bank of England is now more likely to cut interest rates in December.

The Bank uses its benchmark interest rate – which heavily influences the cost of borrowing for households and businesses – to try to bring inflation to its target rate of 2%.

“Inflation remains well above the Band of England’s happy place of 2%,” says Alice Haine, personal finance analyst at Bestinvest.

But, she says, the latest figures could pave the way for a sixth interest rate cut since August last year.

The prospect of an interest rate cut has seen lenders make changes already. In recent weeks, many major lenders have lowered their rates for people getting a new fixed-rate mortgage or renewing their current one.

“There has been particular emphasis placed on rates for home movers with some of the best rates available for purchases,” says David Hollingworth, of mortgage brokers L&C.

Data from the financial information service Moneyfacts shows that the average rate on a new two-year fixed deal has fallen to 4.88%, and is down to 4.93% for the average five-year fixed deal.

Average rates for those only able to put down a deposit of 5% or 10% – often first-time buyers – are now looking lower than they have been at any time in the last two or three years.

Why are lenders cutting rates now?

Inflation is only one factor in lenders’ decisions to cut mortgage rates now.

Generally, Christmas is a quiet time for the housing market as potential buyers and sellers concentrate on turkey and trimmings instead.

So, they may be lowering rates in a bid to stimulate custom.

The same cannot be said for savings rates. “Competition has been scarce,” says Caitlyn Eastell, from Moneyfacts.

That is compounded by the fact that many of those buyers, sellers and savers have put plans on hold until they find out what happens in the Budget delivered by Chancellor Rachel Reeves on 26 November.

The Budget looms large over the housing market, with talk of taxation on high value properties, as well as over economic activity in general.

Reeves wants to introduce measures to lower the rate of inflation, and help people with the cost of living. However, she also needs to bring in more money or cut government spending to meet her own fiscal rules.

It is a delicate balancing act that will affect individual and family finances, affecting the money people have to spend in the supermarket and the appetite they have to save, as well as buy or sell a home.



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