On the release of data which shows that UK inflation rose to 2.3% in February 2017, Scottish Chambers of Commerce warned that our Governments need to focus on mitigating business costs and boosting consumer confidence over the next two years. Liz Cameron, Chief Executive of Scottish Chambers of Commerce, said:
“These latest inflation figures only tell part of the story in terms of the challenges facing Scottish businesses. Rising inflation is not unique to the UK and inflation in the Eurozone has also hit 2% in recent weeks. In common with the rest of Europe, it seems that rising fuel and food prices are the major drivers of this latest increase.
“More worrying is that there is a continuing upward trend in the price of goods leaving factories and in products such as imported metals. These are clear signs that not only will the UK be subject to the same cost pressures that our European neighbours face but that we will also see added pressure from the impact of exchange rates and the weakness of sterling. These issues indicate that forecasters are right when they say that we should expect to see inflation rising at up to 3% over the next year or so.
“As inflation pushes above the government target, we would ask the Bank of England to remain cautious and keep interest rates low for the time being. The most effective economic tools now lie in the hands of the UK and Scottish Governments. They must maintain a strong focus on tackling cost increases to businesses, with sensitive plans for taxation. This is particularly important at a time when businesses are under pressure in terms of the prices of goods and services and in terms of their ability to maintain salaries at a level that will keep pace with rising inflation, thus helping to maintain consumer confidence and preserving demand and growth in the economy.”