Commenting on the Consumer Prices Index figures for February released today David Kern, economic adviser to the British Chambers of Commerce, said:

Todays figures show annual CPI inflation at 2.5 per cent, which is marginally below market expectations.  Though the new figures show an increase from 2.2 per cent in January to 2.5 per in February, this is a technical consequence of the change in the ONSs methodology of recording gas and electricity price rises. 

The underlying picture is unchanged, and it remains highly likely that after rising a little further in the next few months, CPI inflation will fall rapidly later in the year.  It is significant that core CPI inflation (excluding food, energy and tobacco) has fallen further to 1.2 per cent, compared with 1.5 per cent last Autumn. 

While the MPC cannot be complacent about the rise in headline inflation, the deepening global financial crisis must be given a higher priority at present.  Undue delay in cutting interest rates will entail serious risks for the economy.  We strongly urge the MPC to cut interest rates in April.