Comments on today’s ONS Inflation figures
Commenting on today’s release of Consumer Prices data by the Office for National Statistics, Christian Spence, head of research and policy at Greater Manchester Chamber of Commerce, said:
“Today’s data shows that the headline rate of inflation in July remains at 2.6%, the same as in June. However, this level has been maintained almost entirely because of five continuous months of falling fuel prices, whilst other areas of the economy, such as food and clothing, continue to see strong increases in inflation as the weakness of Sterling continues to pass through into the consumer market.
“These inflationary pressures are also seen in a small increase in the rate of RPI inflation, from 3.5% to 3.6%, and is significant this month, as this will be used to set the average rail fare increase in the UK in January 2018.
“Recent evidence from the Chamber’s Quarterly Economic Survey suggests that companies continue to feel under pressure from inflation and from the changes in levels of Sterling. Whilst some exporters can capitalise on this depreciation, it is not a silver bullet for either the UK’s net trade position or for the economy overall. Our expectations are that inflation will peak close to 3% in late 2017 or early 2018 meaning that real wages and household incomes are likely to continue to be eroded for some time yet. This places a downward risk on our expectations for overall growth for the rest of this year and into next. Our current forecasts are for UK GDP growth of 1.6% in 2017 and 1.5% in 2018, though we expect Greater Manchester’s economy to grow by around 3.25% this year.”