• Annual output inflation down to 3.6% in March from 4.1% in February; annual input inflation down to 5.8% from 7.8% in February
Commenting on the producer prices for March 2012 published today by the ONS, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said:“These figures show a welcome decline in the pace of producer price inflation, which will help to reduce the current squeeze on businesses and consumers. However, the fall was not as sharp as many analysts were expecting. On this basis, we expect the downward trend in inflation to continue throughout the year, but at a slower pace than the MPC predicted. Increases in oil and food prices have reinforced concerns about the outlook for inflation, and although there are signs that these pressures are easing, the situation will remain uncertain for some time.
“If the MPC is faced with a slower fall in inflation, it would reinforce the case against further increases in QE. We believe that additional increases are unnecessary, but existing QE should be made more effective by helping to increase lending to credit-worthy businesses.”