ANNUAL headline Consumer Prices index inflation was reported at 9.9% for August by the ONS today, led lower by petrol prices. This was marginally below consensus estimates of 10.0%, and down slightly from the peak so far of 10.1% in July. The CPI monthly increase was +0.5%, compared to 0.6% expected, and 0.6% in July.
Commenting on the latest figures, British Chamber of Commerce Director of Policy and Public Affairs, Alex Veitch, said:
“This rise in Consumer Prices inflation by 9.9% confirms the sustained pressure businesses and consumers have been facing over the past year.”
“While the rate of growth has eased slightly, this has been driven by a fall in motor fuel costs – other goods continue to rise. There is a limit to how long any firm can sustain these rising costs before something has to give. We know from our research that two thirds of businesses plan to increase their own prices.”
“The size of last week’s Government intervention on energy prices should have a dampening effect on inflation when it is enacted. But the lack of detail on exactly how much help any individual business will get, and for how long, means very few will be planning to invest any time soon.”
“There are also a whole host of other issues ranging from transport and shipping costs, raw material prices, energy sector regulation and the tight labour market that must be addressed. It is imperative the Government’s forthcoming ‘fiscal intervention’ provides business with confidence that there is a cohesive plan to take the economy forward.”
Kevin Brown, saving specialist at Scottish Friendly, commented:
“The fall in the inflation figures from the ONS come as something of surprise, in what continues to be a very uncertain situation. The problem for households is that even if inflation is showing signs of slowing, they are unable to make confident personal financial decisions without knowing what is coming down the tracks until something approaching the status quo returns.”
“The energy bill freeze will begin to help to alleviate some of the uncertainty, but this level is still well above where we were just 12 months ago.”
“What is clear from yesterday’s wage data compared with the latest inflation figures is that workers are getting real term pay cuts of 4.4%. This is even worse for public sector workers where pay rises are still stubbornly low at around 2% – a net pay cut of 7.9% – a clearly unsustainable level.”
Nicholas Hyett, an Investment Analyst with Wealth Club , also said:
“Inflation moderated slightly in August, but it is far too early to be celebrating victory in the war against rising prices.”
“Critical everyday items like food and home heating continue to get more expensive, sucking disposable cash out of consumer wallets. As well as making everyone’s lives more miserable that has repercussions for businesses across the UK’s service economy. When times are tough, belts are tightened and people focus on the essentials – restaurant trips, new cars and holidays all start to get delayed, putting businesses under pressure and jobs at risk.”
“The shape of inflation is also a concern. Inflation driven by food, electricity and gas will likely hit the poorest hardest – since they spend a far greater proportion of their income on essential goods than the wealthy.”
“Today’s moderation in inflation is welcome, but it may be just a short calm before the storm resumes.”
