Commenting on the inflation statistics for July 2017, released today by the ONS, Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said:
“Inflation was unchanged in July, as falling fuel prices continue to put a check on price growth.
“Inflation is likely to resume its upward trend in the short term, as the sizable increases in the cost of imported raw materials over the past year continue to pass through supply chains. That said, it remains likely that inflation is close to peaking, with input prices slowing for the sixth successive month – an indication that inflationary pressures further down the supply chain are starting to ease. There also remains little evidence that higher inflation is becoming embedded in higher pay settlements, with a weakening in economic conditions over the first half of the year helping to keep a lid on inflation expectations.
“Against this backdrop, inflation is likely to peak at around 3% by the end of the year, before dropping back in subsequent years. Such a scenario should give the MPC sufficient scope to keep interest rates on hold over the near term, particularly given a slowing economy and heightened political uncertainty.
“With the UK’s economic outlook becoming more uncertain, there needs to be a greater focus on measures to boost confidence and growth, including addressing the escalating burden of up-front taxes and costs associated with doing business in the UK.”