Commenting on the March inflation figures published today by the ONS, David Kern, Chief Economist at the British Chambers of Commerce, said:
“The higher-than-expected inflation figures complicate the Monetary Policy Committee’s job. Given the weak economy and the serious pressures facing businesses, it would be wrong for the Bank of England to overreact to a surge that is likely to prove temporary.
“With prices now rising faster than wages, the initial impact of higher inflation is to reinforce the squeeze on disposable incomes and suppress demand.
“One key issue for the MPC is a new Government’s ability to produce a more credible plan for reducing the unsustainable deficit over the medium-term. If a plan can be presented shortly after the election, it would be easier for the MPC to maintain low interest rates for a longer period, making it possible for businesses to lead and sustain the recovery.”