ONS – Official Journal of Mortgage Finance

This is significantly higher than the increase in household costs for renters and homeowners. According to the ONS, this reflects rising mortgage rates.

The ONS Household Costs Index (HCI) found that inflation was 3.2% in the private rented sector and 1.9% in the social and other rented sector.

For homeowners, the increase in household costs was smaller, at just 1.3 percent in the twelve months to June.

There was more positive news, however, and that was that this inflation indicator overall eased in line with other inflation indices. Across all household types, this HCI inflation figure rose 2.5% through June, slowing from the 4.5% annual rate recorded in March of this year.

According to the ONS, the inflation rate for all households has followed the inflation rate for middle-income households (fifth income decile) most closely over the past three years. Costs for these households rose by 2.3 per cent in the year to June. In contrast, high-income households saw household costs rise by 3.3 per cent and lower-income households saw a rise of 1.7 per cent.

The figures also show that households without pensioners continued to experience a higher annual inflation rate (2.9%) than pensioner households (1.2%).

Sarah Coles, head of personal finance at Hargreaves Lansdown, said: “Stubborn mortgage rates and spiralling rents are hitting working families hard. Behind the headlines about easing inflation lie mortgage jams and ruinous rent increases that are leaving some households facing inflation rates of up to 3.7%.”

She adds: “The impact of higher mortgage rates is hitting people's pockets as more and more of them take out new mortgages. Those with a mortgage face a much higher rate of inflation than those without. And those with a larger mortgage face even worse jumps in monthly payments – which is why higher earners are facing terrible price inflation.”

This is reflected, according to Coles, in the HL Savings & Resilience Barometer, which found in July that those who refinanced a mortgage to a higher interest rate between late 2022 and mid-2024 will have an average of just £315 left at the end of the month – £95 less than those who have yet to refinance their mortgage.

Coles adds: “Tenants are not spared from the problems – and [these tenants] Because most people are on lower incomes, these rents make up a disproportionately large part of their income, so the impact is even more acute. In many cases, their finances were already on the brink, so inflation of 3.2% will be particularly painful.”

H&L's barometer found that renters are left with just £79 at the end of the month.