"The decision reflects the MPC's view that, although inflation has peaked, further evidence is needed to confirm a sustained return to the 2% target. The latest ONS figures show CPI at 3.8% in September, broadly in line with BCC's forecast of 3.7%. The IMF also expects the UK to record the highest inflation in the G7 this year and next. So, the key question is: will UK inflation stay higher for longer, and will interest rates remain higher to control it?"
"BCC's latest Quarterly Economic Survey shows that concern about inflation has been rising again, cited by 57% of firms - the second biggest issue for firms after taxation, cited by 59%. Over the past year, businesses have told BCC that the rise in employer National Insurance Contributions and National Minimum Wage has fed directly into price pressures, with the labour costs remaining the top cost pressure, cited by 72% of firms."
"Another major factor is the increasing global trade barriers. Post-Brexit frictions with the EU continue to add significant cost pressure to imported goods and services. Firms reported to the BCC that rising shipping and labour costs are putting pressure on their operations. Many said they are seeking financial assistance, tax incentives, or government support to help offset the costs and risks of exporting."
Inflation appears to have peaked but remains well above the 2% target, with CPI at 3.8% in September and forecasts showing the UK with G7-high inflation. Business concern about inflation is rising, with 57% of firms citing it and 59% citing taxation. Employer National Insurance and minimum wage increases have pushed labour costs to be the top cost pressure for 72% of firms. Services inflation stays strong despite a looser labour market and ongoing recruitment difficulties. Post-Brexit trade frictions and higher shipping and labour costs add import and export pressures. Interest rates are likely to stay elevated to control inflation, with a projected 4% through 2025.
Read at London Business News | Londonlovesbusiness.com
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