Commenting on the news that inflation has remained level at 2.3%, Liz Cameron, Chief Executive of Scottish Chambers of Commerce, said:
“Inflation now looks set to remain above the 2% target for some time to come as higher fuel costs and rising import costs feed through into the economy. As a result, the Bank of England will come under renewed pressure from some quarters to raise interest rates but we believe that, given current economic conditions, this would be premature.
“Scotland’s economy is contracting and growth in the UK economy is expected to slow this year. This means that a supportive business environment needs to be maintained, with the UK and Scottish Governments taking whatever action is necessary to reduce the cost burden on businesses.
“The continued weakness in sterling may be positive news for exporters but it is beginning to track through into rising costs for manufacturers and retailers and this is resulting in higher costs for consumers. It may be time for the UK Government to look again at rates of VAT, with a view to providing a boost to consumer demand at a crucial time for the economy.”