Commenting on the release of official data which shows that inflation rose by 1.0% in September 2016, Scottish Chambers of Commerce (SCC) have signalled that rising inflation is likely to be a feature of our economy in the months to come. Liz Cameron, Chief Executive of SCC, said:
“We have grown used to very low levels of inflation over the past two years, with few upward pressures on prices. This sharp jump indicates that prices are beginning to rise in particular areas, such as restaurants, hotels, transport and communication. Our SCC Quarterly Economic Indicator has indicated that many of Scotland’s retailers are expecting prices to increase in the final three months of this year and we have already seen that the weakness of the pound has had an upward effect on prices, such as the new iPhone 7 in the UK, which will translate across to mobile phone contract prices.
“For as long as the inflation rate remains below or around the Government’s 2% target, the effects on our economy will be marginal. However, the danger is that inflation pushes beyond that target, since any monetary measures taken by the Bank of England to rein in inflation could have negative consequences in terms of future growth. Rising inflation will complicate an already delicate balancing act for the future growth of our economy.”