Inflation rise dampens business sentiment – Chamber
The rise in UK inflation to 3.4 per cent is a pushback on the steady progress made towards the Bank of England’s two per cent target, business leaders in Greater Birmingham have warned.
Among the key drivers of the higher-than-expected rise were tobacco prices, airfares, and rising food costs including bread and cereal.
The rise also dampens the hopes for an expected interest rate cut in February, with the Greater Birmingham Chambers of Commerce (GBCC) Quarterly Business Report noting that inflation is the second biggest issue that firms face.
Paige Bowyer (pictured), GBCC policy and research analyst, said: “Today’s figures underline that the path on inflation remains uneven.
“With CPI rising to 3.4 per cent in December, progress back towards the Bank of England’s 2 per cent target looks uncertain, and expectations of an interest rate cut in February have been pushed back.
“For businesses, this adds to an already fragile environment.
“While the Budget avoided piling on further immediate pressures, it fell short of delivering the growth-focused measures firms need to invest and expand.
“Inflation remains a significant concern locally, with our latest Quarterly Business Report showing it is the second biggest issue for businesses, cited by 24 per cent of firms.”
