The "Penny-Farthing" Effect, August 2026 Inflation & Affordability Update
Hello there! It’s Craig Burkitt here. I was standing in the queue at the local bakery this morning, watching the prices on the little chalkboard, and it got me thinking about how much the "value" of our coins changes when we aren't looking.
I have some good news to start with: for the first time in a while, the money landing in your bank account is actually growing faster than the cost of the things you need to buy. It’s like a race where your legs have finally found an extra gear, and you’re slowly pulling ahead of the "expensive stuff" chasing you.
The Magic (and Mischief) of Inflation Did you know that if prices stayed exactly the same forever, the world would actually get a bit stuck? A tiny bit of "price creep"—which we call inflation—is normal. But lately, it’s felt more like a sprint.
Think of inflation like a leaky bucket. If the inflation rate is 2.8% (which it is this August), it means that for every £100 you spent last year on your weekly shop, petrol, or new shoes, you now need £102.80 to buy the exact same things. Your money has lost a little bit of its "muscle." The good news? That 2.8% is actually lower than it was in July (3%) and way better than the 3.4% we saw back in May. The "leak" in the bucket is slowing down!
Are You Winning the Race? Here is the most exciting bit of news this month: while prices went up by 2.8%, the average person’s pay packet grew by 3.5%.
Imagine you have two runners. "Prices" is running at a steady pace, but "Wages" is running slightly faster. Because your pay is growing by 0.7% more than the cost of living, you have a tiny bit more "jingle" in your pocket at the end of the month. We call this a "positive signal for affordability." It simply means that, bit by bit, life is becoming slightly easier to manage than it was a few months ago.
What Does This Mean for Your Moving Plans? If you’ve been thinking about finding a new front door or moving to a bigger garden, this is a big deal.
The "Big Bank" (The Bank of England) has kept its main interest rate at 3.75%. Because inflation is behaving itself and dropping towards that 2.8% mark, it makes everything feel a bit more stable. People are feeling braver; we saw 58,200 home loans approved this month, which is a jump up from July.
When your wages grow faster than your bills, you can afford to pay back a slightly larger loan, or perhaps save for that deposit a little quicker. It’s not a gold rush, but it’s a steady, healthy drumbeat.
Bringing it Home to PE29 1 So, how does this national "tug-of-war" between wages and prices affect us here in PE29 1?
Even though the national average house price is around £287,003, our corner of the world is a bit more premium, with local asking prices sitting at £305,357. Because people nationally are feeling that 0.7% boost in their spending power, it keeps our local market "balanced."
In PE29 1, we currently have 80 properties for sale, and they are taking an average of 254 days to find the right owner. It’s a patient market, but a very strong one. If you’ve lived in your home here for seven years, it’s likely worth about £40,049 more than when you bought it! That’s a huge win that local families can use to take their next step.
The Bottom Line The clouds are definitely parting. With your pay rising faster than the cost of milk and electricity, the "squeezed" feeling is starting to ease. It’s a great time to look at your budget, see how much that 0.7% boost helps, and perhaps start dreaming about that next move.