Commenting on the December 2008 inflation figures published today by the ONS, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:
“This fall in inflation was less than the markets expected, mainly because of sterling’s weakness. But, there is still a distinct risk of deflation later in 2009, particularly on the RPI measure.
“To counteract the threat of deflation, the MPC must act forcefully. As well as cutting interest rates to one per cent in February, the Bank of England must start using new powers to buy assets and boost the money supply.“While the UK faces serious risks as its credit rating comes under scrutiny, the Government and MPC have no choice but to act in order to avert the threat of a deepening recession.”