Commenting on the inflation statistics for March 2018, published today by the Office for National Statistics, Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said:
“Inflation slowed again in March, confirming its downward trajectory.
The largest downward pressure came from clothing and footwear prices which rose by less than a year ago. The latest figures also provide further confirmation that real wage growth has returned to positive territory.
“Inflation is likely to continue easing over the near term as the impact of the post-EU referendum slide in sterling fully dissipates. The BCC’s own Quarterly Economic Survey confirms that the pressure on firms to raise prices have eased a little over recent months. That said, upward pressure from rising commodity prices could well keep inflation hovering above the Bank of England’s 2% inflation target over the short term. As a consequence, real wage growth may remain muted for some time to come.
“While interest rates are expected to rise next month, with UK economic growth likely to have slowed in the first quarter and inflation easing, the case for tightening monetary policy remains relatively weak. We’d caution against a sustained increase in interest rates as it could dampen confidence and weaken overall economic activity. More must also be done to lift confidence and growth, including addressing the escalating burden of up-front business costs.”