With the economy as it is should I be changing my car now? - Peter Vosper

This past week has done little to make any of us feel confident that we are winning the battle to bring inflation down. We were all hoping that with energy prices continuing to fall and the reduction in the rate of inflation would mean we could rely on the likelihood of interest rates being at their peak and some hope of another fall between now and the end of the year.

Yes, the energy rises that helped to push inflation over 11 per cent went into reverse bringing inflation down below seven per cent but on closer examination items such as core inflation, which takes out the impact of energy and food barely moved.

Service inflation actually went back up to a joint 31- year high and as a result the financial markets were looking seriously at government borrowing. The markets are concerned the UK is more inflation-prone than it was, and than other similar countries, meaning higher interest rates would remain longer. There is even the possibility of another rate rise next month.

We also know the country’s productivity has been hit after the pandemic with less people returning to work and although the government has introduced several measures to change this it will take time to have any effect. However, we should take some comfort from Bank of England governor, Andrew Bailey who said 'it’s an adjustment but we should avoid…preaching crisis. It’s not that'.

How then does this mean we should look at changing our cars.

The manufacturers too, have increased their prices because of certain shortages and have built order banks to give them a warm feel. People are still prepared to pay the higher monthly rates and for those who are concerned manufacturers have increased the period of many PCPs up to 48 months. The electric car uptake which has mostly been at the top end of the market has stalled with high prices and increases in energy, leading to a call to the government to delay the 2030 target date.

Many drivers are not yet prepared to make the move to full electric and are compromising with hybrids. Now with stocks of internal combustion engines beginning to flow through, stocks are becoming available and there are some good offers out there for the first time since Covid.

The used car market which has been very buoyant in compensation to the shortage of new cars, has meant prices have risen to their highest levels, is now forecast to fall next month. Therefore, those of you who have desirable trade-ins may see a fall in their value, adding to the price to change, or increased rates. As I have said in this column before you should talk to a dealer (or two) that you know and trust and get the best advice.

Interest rates on used cars have risen this month and there are some subsidised rates on new cars, making new a better buy.

It can be complicated and if at the end of it you are unsure you should wait, but with manufacturers wanting to increase volumes back to 2019 levels and the concern of cheaper Chinese cars arriving on our shores over the next few years you may find the deal you want.