Beyonce’s sellout UK tour has led to soaring inflation with homeowners facing more interest rate pain
BEYONCE’S sellout UK tour has led to soaring inflation — leaving homeowners facing more interest rate pain.
The Bank of England is today expected to make its 13th rate rise in a row — and a 0.5 per cent increase would lift the cost of borrowing to five per cent.
Overall 60 per cent of mortgage holders — around 8.5million Brits — will now spend more than a fifth of their incomes on monthly payments — well up on 36 per cent of mortgage holders last year.
Experts are concerned that core inflation — which tracks recreational spending on the likes of gig tickets, restaurants and shops — rose from 6.8 to 7.1 per cent in May despite forecasts it would stay the same.
One of the biggest drivers of the increase was admission fees to live music events, said the Office for National Statistics.
US star Beyonce kicked off her Renaissance tour last month.
Hotel rates also rocketed, with the Ibis in Cardiff charging £9,508 for a double room on one of her first show dates.
Tickets for Taylor Swift’s forthcoming UK tour, released las month, also pushed up recreational spending — as did the launch of £50 game Legend of Zelda: Tears of the Kingdom.
Michael Hewson, at CMC Markets, said: “Last week Sweden blamed the ‘Beyonce effect’ for a surprise rise in their inflation rates. The same appears to have happened here in the UK.”
Ahead of today’s interest rate announcement, strategist Rob Clarry, at Evelyn Partners, warned: “Core inflation has hit its highest rate since March 1992. The odds on a 0.50 per cent move from the Bank have shortened.”
Higher rates will also mean 1.4million households will lose a fifth of their disposable income, says the Institute for Fiscal Studies.
Of those, around 690,000 are under 40 years old and will have to pay almost £280 more each month.
Those aged 30-39 face paying almost £360 more — largely because they have more expensive properties and took loans when rates were significantly lower.
Consumer price inflation, which includes food and energy, has remained stuck at 8.7 per cent.
PM Rishi Sunak has pledged to reduce it to five per cent, but economists say that target is looking less likely.
There are even fears the rate could reach six per cent next year.
Charles White, at fintech firm Saxo UK, said: “The UK is in an economic danger zone…it also shows that the Bank is continuing to lose the war to bring down or dominate enemy No1 — inflation.”
Around 3.3million Brits will see fixed-rate mortgage deals end between now and late 2026.
They face a big income shock as they come off low base rates.
Yesterday average mortgage costs were 6.15 per cent for a two-year fixed £200,000 loan, up from 6.07 the previous day.
Just this one-day movement will cost an extra £10 a month.
Rents are at record levels with tenants paying a quarter more than before the pandemic.