Commenting on the inflation statistics for September 2021, published recently by the Office for National Statistics, Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said:
“September’s dip in inflation reflects temporary data distortions rather than the reality on the ground.
“The slowdown was largely due to strong base effects caused by dining out costing less last month in comparison with September 2020, when prices increased following the end of the Eat Out to Help Out scheme.
“A renewed inflationary surge is expected in the coming months with the increase in the energy price cap, partial reversal of the VAT reductions for hospitality & tourism and persistent supply chain disruption. This is likely to push inflation above 4% by the end of 2021.
“Rising inflation could disrupt UK’s economic recovery by eroding consumers’ spending power and squeezing firms profit margins and ability to invest.
“While inflation is uncomfortably high, the Bank of England must hold its nerve on interest rates. Raising rates at a time of escalating cost pressures and looming tax rises would severely undermine an already fragile recovery.
“Although global price fluctuations aren’t typically something in the UK government’s direct control, more needs to be done to help businesses keep costs down and stay competitive. This should include a moratorium on all policy measures that increase upfront business costs for the remainder of this parliament.”