· Producer price output annual inflation up from 5.7% in June to 5.9% in July
· Producer price input annual inflation up from 16.8% in June to 18.5% in July
Commenting on the producer price figures for July, published today by the ONS, David Kern, Chief Economist at the British Chambers of Commerce, said:
“The latest producer price figures were largely as expected with both input and output price inflation accelerating again in the last month. The increase will worsen the relentless squeeze faced by businesses as well as consumers.
“Since the factors pushing up producer price inflation are largely international, it would be a mistake to respond to this situation by raising UK interest rates. Such a move could trigger an economic setback, at a time when the government’s efforts to reduce the deficit are dampening demand. Any increases to interest rates must be postponed until the early months of 2012, and possibly later.
“Keeping interest rates low is not enough, however. The government must reinforce its effort to stimulate growth and make it easier for businesses to create jobs, export and invest.”