Reacting to the latest inflation data published by the ONS this morning, David Bharier, Head of Research at the British Chambers of Commerce, said:
“Sticky inflation has been in danger of becoming a uniquely British disease as the UK continues to stand out from the rest of the G7.
“Today’s CPI rate of 3.8%, coming in lower than expected, could provide some reassurance that we are at the peak, as expected by the BCC and Bank of England. However, the picture is mixed. Core inflation has slowed, but the reintroduced producer price data show factory gate prices rising by 3.4%, hinting that cost pressures remain in the pipeline, particularly for food and manufacturing.
“Our latest survey data shows that concern about inflation has been rising again and is now the second biggest issue for firms after taxation. But the two are closely linked: for the past year, businesses have told us that the rise in employer National Insurance Contributions has fed directly into price pressures and weakened investment. Labour costs continue to be the main cost pressure, cited by 72% of businesses.
“Higher energy bills are also a concern, cited by 50% of firms, with the rise in the energy price cap at the start of October indicative of the sustained pressure. Without action to help firms bring down costs, there is a risk of a repeat of a 2022-style energy shock.
“The upcoming Budget will be pivotal. Further tax rises could exacerbate a climate of low growth and rising costs. Unlocking growth through increased investment in infrastructure, AI adoption, and a bold push to increase exports, is the only long-term solution.”
More information on the ONS data can be found here.