Inflation figures clear way for further sizeable interest rate cuts

Commenting on the inflation figures published today by the ONS, David Kern, Chief Economist at the British Chambers of Commerce, said:

“UK annual CPI inflation has fallen for the first time since August 2007. But, the declines in inflation were much sharper than the markets expected.

"We predict further sharp falls in CPI inflation towards 1 per cent in the final months of 2009. The possibility of deflation at that time is now a distinct risk. Deflation would have appalling consequences for British business and for the economy as a whole so it is imperative that the Government and MPC take forceful action.

“Following these figures, it is clear that UK interest rates will be cut further, most likely to 2 per cent in early 2009. One cannot rule out rate cuts below 2 per cent later next year.”

Ends

Media Contacts:

Fiona Cunningham
Tel: 020 7654 5812
Email: f.cunningham@britishchambers.org.uk

OR

Sam Turvey
Tel: 020 7654 5813
Email: s.turvey@britishchambers.org.uk

Notes to Editors:

The British Chambers of Commerce (BCC) is the National Voice of Local Business.
The BCC sits at the heart of a powerful nationwide network of Accredited Chambers of Commerce serving business across the UK, which employ over five million people.