Dip in inflation 'a temporary reprieve ' - Chamber

Price increases dropped slightly during September as the economy continued to reopen, according to official figures release today.

The increase in the cost of living, as measured by the Consumer Prices Index, fell to 3.1 per cent in the year to September, down from 3.2 per cent in August.

Higher prices for transport were the biggest contributor to price rises.

The Bank of England had warned it would have to act over rising inflation, suggesting interest rates may rise soon.

According to the Office for National Statistics (ONS), the inflation rate fell back slightly last month because prices in restaurants rose less this August than last when the Eat Out to Help Out Scheme was running.

Under the scheme, diners got a state-backed 50 per cent discount on meals up to £10 each on Mondays, Tuesdays and Wednesdays.

Raj Kandola, head of policy at Greater Birmingham Chambers of Commerce, said: “The latest inflation figures point towards more of a temporary reprieve as opposed to a longer-term trend as labour and supply chain shortages continue to bite.

“As the energy crisis intensifies, we are likely to see inflation rise over the next few months and all eyes will be on the Bank of England to see if they respond by raising interest rates.

“Although some people will have benefitted from higher pay growth, an increase in inflation will also have a knock-on impact on real income growth and ultimately consumer spending - a topic that we will cover in the upcoming launch of the Birmingham Economic Review.

“Within this uncertain context, we would urge the Chancellor to use the upcoming Autumn Budget to reduce the cost pressures that businesses are facing if we are to put in place the foundations required for a sustained economic recovery. ”

Click here to book on to the Birmingham Economic Review launch event.