Drop in inflation reassuring but further action still needed - Chamber

Birmingham business leaders today welcomed the further drop in inflation to 6.8 per cent - but warned the Government further action was needed to ease cost pressures for firms.

New Office for National Statistics figures out today show that inflation in the UK dropped from 7.9 per cent in June to 6.8 per cent in the year to July.

It is the second month in a row that inflation has dropped sharply with price rises now at a 15-month low. The latest figure was driven by a reduction in the energy price cap and food costs rising less rapidly, particularly milk, bread and cereals.

But UK inflation remains stubbornly high overall compared to many other nations and well above the Bank of England's target rate of 2 per cent, and the bank is expected to raise interest rates again next month as a result.

Cameron Uppal (pictured), policy and public affairs adviser for the Greater Birmingham Chambers of Commerce, said: “It's reassuring to see that the rate of inflation fell in July.

“Given the challenging landscape that firms and households have faced with spiralling costs over the last 18 months, this continued downward trajectory will hopefully provide businesses with the confidence to plan with confidence and certainty.

“Despite the positive direction with core inflation continuing to fall, now is not the time for the Government to take their foot off the pedal with prices still remaining high and pressure still being felt with household finances - our latest Quarterly Business Report revealed that a third of businesses reported that inflation was more of a concern than three months ago.

“Intervention from the Government to drive down inflationary pressures by easing labour market pressures and smoothing trade flows with the European Union would make an immediate impact.”