Inflation soared to 3% in January and could lead to businesses raising prices, say East Midlands Chamber.
The latest estimated figure from the Office for National Statistics is up from 2.5% in December to its highest level in 10 months and is significantly higher than the Bank of England’s target of 2%.
East Midlands Chamber Director of Policy and Insight Richard Blackmore said: “This 10 month inflation high isn’t good news for East Midlands firms, especially when inflation was reported as one of the biggest concerns of businesses in our Quarterly Economic Survey, with 6 out of 10 anticipating that they’d need to increase their prices.
“Already grappling with the persistent high cost of doing business and bracing for further costs to hit, like higher National Insurance contributions from April, this is yet another blow and frustrating that we’re moving further away from the Bank of England’s 2% target, set by the government.
“All eyes will now be on the Bank of England to see whether this inflation rise impacts their decision to cut interest rates or not in March. It puts the likelihood of a cut into question, although economists do expect interest rates to fall this year.
“Operating within such tough conditions, it’s essential political leaders prioritise support for business and that the government’s comprehensive spending review gives clear assurance that economic growth can and will be delivered.”
To view East Midlands Chamber’s Q4 Quarterly Economic Survey findings click here.
