April’s inflation figures show a marked improvement, which supports businesses’ plea to the Bank of England to avoid further rate rises in the near future, it has been claimed.
The latest figures from the Office of National Statistics (ONS) show that CPI inflation fell from 3.1% in March to 2.8% in April, while RPI annual inflation eased from 4.8% in March to 4.5% in April.
According to the British Chambers of Commerce (BCC) the figures fall in line with market expectations, and reinforce businesses’ sentiments that previous rate rises should be given time to have an effect before any further action is taken.
“Coming after this week’s lower- than-expected figures for producer prices, the new figures support our view that, while inflation remains a problem that has to be dealt with, there is no justification for damaging over-reaction,” said David Kern, economic adviser to the BCC.
“The figures published this week support the findings of our Quarterly Survey published last month, which indicated that business pricing power is no longer increasing, and may well have started to diminish.
“While we accept that further tightening may eventually be necessary, the new figures support our call for restraint and for avoiding harmful overkill. The MPC should keep interest rates on hold for the time being”
The latest BCC Quarterly Economic Survey has forecast a marked slowdown in the pace of UK economic activity as a result of the recent interest rate rises.
© Crimson Business Ltd. 2007