Inflation will ease during 2012, but at a slower rate than expected, says BCC

David Kern
Chief Economist at British Chambers Chambers of Commerce
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Post date: Wednesday, 18th April 2012

David Kern at the British Chambers of Commerce (BCC) on the inflation figures for March, published by the ONS this week.

  • Annual CPI inflation up from 3.4% in February to 3.5% in March
  • Annual RPI inflation down from 3.7% in February to 3.6% in March


The inflation figures for March were broadly as expected. However, it is disappointing that the steady fall in inflation seen since September 2011 has been reversed this month.

We expect inflation to fall over the remainder of the year. But the decline in inflation will be less than the Monetary Policy Committee (MPC) has envisaged. The squeeze on businesses and consumers will ease, but not as rapidly as first hoped.

With inflation falling more slowly than expected, we believe that any further increases to the Quantitative Easing (QE) programme are unnecessary.

The main priority should be ensuring that the additional liquidity provided by the most recent QE increase is put to better use to improve the flow of lending to creditworthy businesses.

The government's credit easing programme should be made more substantial, but the MPC must also reconsider its reluctance to purchase private sector assets.

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