By Marcus Leach
The British Chambers of Commerce (BCC) have said the rise in inflation figures was not to be entirely unexpected.
The consumer price inflation (CPI) rose from 4% in December to 4.4% in January. Volatility in the Middle East was a major reason for the rise, as soaring energy costs saw mean energy bills rising 4.0% from January to February.
“These figures are slightly worse than those expected by most analysts, though an increase in inflation to 4.4% is not entirely surprising. In the face of higher taxes, increased utility bills and surges in energy and food prices, consumer price inflation could increase above 4.5% before it stabilises,” David Kern, Chief Economist at the BCC, said.
“The present situation will be uncomfortable for the Monetary Policy Committee and the latest CPI figures will intensify calls for an increase in interest rates. But the MPC must be careful before it takes action that may threaten the fragile recovery, particularly in the face of a tough austerity plan, and events in Japan and Africa increasing the risks to the global economy.
“It is likely that the MPC will look to restore its credibility and so we can expect interest rates to be raised in the next few months. However we urge the Committee to move cautiously, and avoid premature measures that may cause an economic setback.”