Inflation spiked up in June, according to figures published recently. The latest figure showed the rate of price rises was 3.6%, up from 3.4% in May. .
With CPI rising by 3.6% in June, off the back of fuel price changes, the daily inflation headache for businesses should not be underestimated. Inflation continues to be a major external concern for the firms we represent.
As the Bank of England Governor acknowledged at our annual conference last month, the labour market impact on inflation needs to be closely monitored. The recent employer NICs increase has significantly weakened business sentiment, and hiring may suffer as a result.
The Bank of England will need to consider carefully further interest rate cuts before the labour market loosens too much. Firms will be watching that delicate balancing act intently.
Easing cost pressures on business is a crucial piece of the jigsaw to help control inflation. A clear tax roadmap, which includes national insurance, would give firms the certainty they need to plan their investment. The British Chambers of Commerce Blueprint for Growth, published last month, details other practical policies we believe can drive forward the UK economy.
