If anyone from the Bank of England gives you a racing tip, you should consider having a flutter. Their forecast for inflation — that it will peak this month or next before falling back — seems to be coming true, if today's producer prices are anything to go by.

The sharp drop in oil prices has obviously eased the pressure on manufacturers, letting them cut prices during August. But there is another significant factor at play — namely weakening demand. This is putting pressure on manufacturers to cut prices too — and the 0.1 per cent dip in core prices, which exclude volatile food, drinks, tobacco and petrol prices, suggests that manufacturers are responding to this. Analysts say it will take a while for these figures to affect the headline inflation figure, which is currently at a 16-year high of 4.4 per cent. But if this trend continues, it is likely that inflation will start to fall in a month or two.

This is great news for homeowners as it opens the door for rate cuts. The Bank of England has already signalled that it will not cut until it has evidence that inflation is starting to fall. Today's figures are the first sign of that.

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