“The latest producer price figures were better than expected, with a slower increase in output prices and a sharp decline in input prices. Although inflationary pressures are strong and are squeezing margins, the lower input prices will be welcomed by businesses and consumers.
“While we still expect consumer price inflation to increase further over the coming months, fears that it will exceed five percent have eased. The new figures will make it easier for the MPC to persevere with low interest rates for longer and increase the QE programme, if necessary. But keeping interest rates low is not enough to stimulate growth. The government must look more closely at policies to boost growth and reinforce efforts to enable businesses to drive the recovery.”