BCC: Falling prices expected to be short-lived
BCC Chief Economist, David Kern, provides his analysis of the latest ONS inflation figures.
· Annual CPI inflation in April 2015 was -0.1%, marginally lower than 0.0% in March 2015
· This is the first time that the CPI has fallen year on year since official records began in 1996
· The largest downward contribution came from transport services, notably air and sea fares
· Goods price inflation in April 2015 was -2.0%, while services inflation was 2.0%
Commenting on the CPI inflation figures for April 2015 published today by the ONS, David Kern, Chief Economist at the British Chambers of Commerce said:
“Despite inflation falling into negative territory, there is no real risk of a prolonged period of deflation in the UK. The underlying reason for low inflation over the past year has been the dramatic fall in energy prices, however oil prices have rebounded in recent months, which will put upward pressure on prices.
“Continued low inflation is good news for businesses and consumers alike – helping to ease cost pressures and supporting economic growth.
“Our forecast is that CPI inflation will approach 1.0% by the end of 2015 and reach almost 2.0% by early 2017. These low inflation figures provide further evidence that the MPC should maintain low interest rates for the foreseeable future.”