Inflation might have risen but much needs to be done to meet the Bank of England’s existing target, according to the North & Western Lancashire Chamber of Commerce.
Figures released on Tuesday showed that inflation, as measured by the Consumer Price Index (CPI), had gone up by 0.3 per cent in the year to January 2016, up from 0.2 per cent in December 2015.
The main contributors behind the rise were motor fuels, food and alcoholic drinks, although the rise was partly offset by a fall in air fare prices.
“Although the inflation figure has increased, the Bank of England’s goal of a two per cent figure remains a way away,” said the Chamber’s chief executive, Babs Murphy.
“A little inflation can be considered a good thing but, as these figures suggest, a lot more needs to happen for that particular aim to be fulfilled.
“It certainly seems that the Bank of England appears in no real hurry to raise the interest rate as it’s remained at half a per cent since March 2009.”
The statistics, published by the Office for National Statistics (ONS) also showed that goods annual inflation last month was down by 1.5 per cent but, in contrast, services annual inflation had increased by 2.3 per cent.
“While UK inflation continues to edge up slowly, inflationary pressures are likely to remain muted for the foreseeable future,” said David Kern, the BCC’s Chief Economist.
“Labour costs remain subdued, and any upturn in oil prices will take considerable time to be felt, given recent sharp declines.
“Our forecast remains that inflation will edge up to around one per cent in the second half of this year, and is likely to stay below the two per cent target until well into 2017.
“Risks remain associated with the weakening global economic outlook. The MPC is likely to avoid any thought of raising interest rates for a considerable time yet. In the face of global headwinds, the policy priority remains to support our exporters.”