New inflation figures highlight acute pressure on business margins
12/02/08 | 12:49
David Kern, Economic Advisor to the British Chamber of Commerce said,
"Today's figures show annual CPI inflation at 2.2% in January, which is slightly better than the market's expectations of a 2.3% figure. The new figures show a modest increase in consumer inflation and are in sharp contrast with the upsurge in factory gate price data, which was published yesterday. It is clear that British businesses are facing a sharp squeeze on their margins.
"Today's figures reinforce the need for a cut in interest rates to 5% in March. Whilst we agree that the MPC will not be able to make very large cuts in interest rates, it is important that rates are reduced modestly to 4.75-5% as early as possible. The fact that core consumer inflation (excluding energy and food) fell in January to 1.3% supports our view that business pricing power is considerably smaller than many thought and strengthens the argument for a cut in interest rates."
EndsMEDIA CONTACT: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.