Drop in inflation provides business with ‘some semblance of confidence’ - Chamber

A bigger than expected drop in inflation will provide “some semblance of business confidence”, Greater Birmingham business leaders said.

Inflation stood at 3.9 per cent during November, according to the Office for National Statistics (ONS) - a sharp fall from the 4.6 per cent recorded a month earlier.

The ONS said price increases slowed in transport, recreation and culture, and food with the biggest downward pressure coming from fuel.

Economists had forecast a fall to 4.4 per cent.

But the decrease is less steep than the drop from September when the consumer price index (CPI) measure of inflation tumbled from 6.7 per cent.

Greater Birmingham Chambers of Commerce welcomed the news as a positive step but warned inflation still remains a major concern for many businesses.

Cameron Uppal (pictured), policy and public affairs advisor at the GBCC, said: “Many local businesses in the Greater Birmingham area will welcome news that the rate of inflation has fallen to its lowest level in almost two years.

“Whilst the fight against inflation is not over, the positive trajectory that we have seen in the second half of this year as we move towards the target of two per cent inflation should bring some semblance of business confidence as firms to look for economic certainty.

“It is evident the extent to which the local business community is still concerned by inflation figures as in in our latest Quarterly Business Report, 30 per cent of businesses revealed that inflation was more of a concern than three months ago.

“With the Bank of England's recent decision to keep interest rates where they are, it will be interesting to see whether the continued downward trajectory of the rate of inflation will see the BofE make a decision to lower interest rates in the immediate future.

“Many firms are still recovering from the constraints and pressures of the last few years - with cash flow and debt repayments struggles - so lowering interest rates would see a lessened impact on household spending, and in turn more consumer spending in the local economy."