Inflation hold is encouraging for businesses, but wider cost pressures remain – Chamber
Midland business leaders today welcomed “encouraging” news that inflation held at 2.8 per cent in May – but warned that businesses remained under significant cost pressures.
The headline rate announcement eased fears that inflation could rise to three per cent due to the Iran war with soaring air fares and petrol prices largely offset by a slowdown in food prices over the month.
According to the Office for National Statistics (ONS), overall transport inflation was 6.8 per cent, the highest annual rate since December 2022.
Food inflation fell from 3 per cent in the year to April to 2.2 per cent in the year to May, the slowest rate of food inflation since December 2024.
Paige Bowyer (pictured), policy and research analyst at Greater Birmingham Chambers of Commerce, said: “Inflation holding at 2.8 per cent in May is encouraging and better than many had expected, but businesses remain under significant cost pressure.
“While some price pressures have eased, firms continue to face higher wage, energy and operating costs, which are weighing on confidence and investment decisions.
“Although recent progress towards easing tensions in the Middle East is welcome, many businesses are still feeling the effects of months of uncertainty in global energy markets and supply chains.
“As a result, firms remain cautious about the outlook for the rest of the year.
“This leaves the Bank of England with a difficult balancing act. Inflation remains above target, but with growth and business confidence still subdued, there will be increasing scrutiny over how interest rates are managed in the months ahead.
“Our latest Quarterly Business Report highlights the pressures firms continue to face, with inflation now ranking as the biggest concern for businesses across Greater Birmingham, cited by 28 per cent of respondents.
“The Chamber will continue to call for action that eases the burden on businesses and gives firms the confidence to invest, create jobs and drive economic growth.”
