Commenting on the inflation figures for November, released by the ONS, David Kern, Chief Economist at the British Chambers of Commerce (BCC) said:
“The slightly higher than expected inflation figures were mildly disappointing, but are still broadly in line with the Bank of England’s own forecast in its recent Inflation Report. The available evidence supports the MPC’s own assessment that, following a temporary increase, inflation would come down towards the target, and possibly below it, over the next 12 - 18 months.“With the tough fiscal tightening programme due to be implemented throughout January, businesses as well as consumers will face increased pressures. Over the next few months, the threat of a major setback to economic growth is much greater than the danger of a surge in inflation. The Bank of England should be reassured by the fact that inflationary expectations, as well as wage pressures, remain under control.
“Given the dangers facing the economy, we urge the MPC to persevere with current expansionary policies and maintain low interest rates for as long as possible. Raising interest rates at a time when the deficit-cutting programme will start to take force would threaten the economic recovery. Avoiding a relapse must be a key policy priority.”