Commenting on the inflation statistics for June 2017,
published today by the Office for National Statistics, Suren
Thiru, Head of Economics at the British Chambers of Commerce
(BCC), said:
“While the fall in inflation in June will surprise many, consumer
price growth is likely to resume its upward trend in the coming
months, with the elevated cost of imported raw materials still
filtering through supply chains. Falling prices for motor
fuels were the main driver behind the fall in the inflation rate
last month.
“Inflation remains a major risk to the UK’s growth prospects this
year, with rising cost pressures for both consumers and
businesses likely to dampen overall economic activity.
“However, it remains likely that the current spell of high
inflation will be relatively short lived with moderating price
growth at the factory gate indicating that inflationary pressures
in the supply chain are starting to ease. If this trend continues
as we expect, inflation is likely to peak sooner rather than
later. While still close to historic highs, the BCC’s latest
Quarterly Economic Survey revealed that the balance of firms
expecting prices to rise over the next year did weaken in Q2.
“We currently expect that inflation will peak at 3.4% by end of
the 2017, before easing back in subsequent years as the impact of
the post-EU referendum slide in sterling drops out of the
calculation.
“With UK economic conditions softening, it is crucial that
the MPC holds its nerve on interest rates,
particularly during this period of heightened political
uncertainty. Raising rates too early could undermine consumer and
business confidence, stifling UK growth further. More must also
be done to ease the burden of high upfront business costs which
continue to impede firm’s ability to invest, recruit and
grow.”
UK
Consumer Price Inflation - June 2017
