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Inflation rises again, 'but will fall in 2012'
General News |
21/10/2011
Rising levels of inflation are continuing to concern business leaders across the UK, as operational costs continue to increase.
Latest Office for National Statistics figures reveal that Consumer Price Index inflation rose from 4.5 per cent to 5.2 per cent in September.
And at the same time, Retail Price Index inflation increased from 5.2 per cent to 5.6 per cent, reducing the physical value of business assets and increasing costs.
David Kern, chief economist at the British Chambers of Commerce, said the sharp increase in inflation in September was larger than expected by most analysts.
He explained that higher utility prices, in particular heating costs, were the main factor for the latest increase.
However, Mr Kern offered hope to the business community, by suggesting that UK inflation is at or near its peak.
As such, he predicted "large declines" during 2012, helping to restore the economic balance.
"High inflation, although worrying, should not have any impact on short-term policy," Mr Kern stated.
He added that the Bank of England's Monetary Policy Committee recently increased its quantitative easing programme by £75 billion in the knowledge this would likely to result in a temporary rise in inflation.
"Additional credit easing would stimulate the availability of lending without increasing the money supply, in turn reducing the risk of adding to high inflation," Mr Kern said.
"In addition, low interest rates must be maintained until at least the end of 2012, to make it easier for businesses to invest and grow."
According to John Kemp, of Reuters, the UK's current rate of inflation is far worse than that of other leading developed nations.
He offered the view that rapid price rises are "more widespread than officials are comfortable admitting in public".
Posted by John Lynes
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