Inflation slowing in April is more likely to be a quirk than a signal about the direction of travel, said Cumbria’s leading business organisation.
The latest inflation data has been published by the Office for National Statistics.
ONS chief economist Grant Fitzner said the slowing of inflation to 2.8% in April was led by lower electricity and gas prices, lower water and sewage bills, and lower food prices, particularly for chocolate and meat.
Suzanne Caldwell, managing director of Cumbria Chamber of Commerce, said: “Inflation slowing to 2.8% in April is more likely to be a temporary quirk due to the timing of some prices changes rather than a signal on the direction of travel.
“The main factors for the slowdown were related to lower prices for package holidays and airfares, alongside a reduction in energy bills due to the price cap.
“However, rising fuel prices continue to add pressure, and there are concerns that ongoing disruption to the Strait of Hormuz will keep energy and transport costs elevated in the months ahead.
“British Chambers of Commerce data suggested that businesses were already concerned about costs before the Middle East conflict erupted.
“Recent research by the BCC showed that 73% of businesses were already concerned with labour costs forcing them to raise prices, while 52% of businesses cited energy bills as a concern.
“The fall in inflation is unlikely to encourage the Bank of England to consider further interest rate cuts. Much will depend on developments in the Iran conflict and the impact this has on energy prices.
“Cutting rates risks embedding inflation but keeping them higher for an extended period may place more strain on businesses at a time when confidence is already weak.
“The Government needs to take clear and practical steps to demonstrate it understands the economic reality that businesses are facing.
“This should include measures to ease the cost burdens businesses face including reducing electricity bill levies and reform of business rates.”
