Price pressure among the region’s businesses remains, says East Midlands Chamber despite inflation dropping to 2.5%.
The latest estimated data published by the Office for National Statistics is still above the Bank of England’s target of 2%.
Director of Policy and Insight Richard Blackmore said: “Regardless of this slight dip, we could still see East Midlands businesses raising prices, with inflation cited as their second biggest worry after corporate taxation in our recent Quarterly Economic Survey. That research, carried out at the end of last year – following the Autumn Budget – revealed nearly 6 out of 10 businesses expect to raise their prices. That’s especially notable because the figure shot up from 3 out of 10 just three months earlier, before the Budget measures were announced.
“While an easing of inflation to 2.5% might seem an encouraging start to the year, that level is still above the Bank of England’s 2% target, then add the fact this is a time when firms are facing a new barrage of costs to contend with this year, like higher National Insurance contributions from April, lower thresholds at which National Insurance contributions begin, on top of an increased national minimum wage, so this is still very much a tough time for businesses. The survey we conducted showed a significant downturn in business confidence in the East Midlands, measured in terms of profitability and turnover expectation, as well as recruitment and investment intention.
“An easing of inflation could raise the likelihood of an interest rate cut next month so all eyes will be on the Bank of England and the decision they reach.”
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