Below target inflation will reinforce credibility of forward guidance policy, says BCC

19th February 2014

Annual CPI inflation was 1.

9% in January 2014, down from 2.0% in December 2013 The fall in inflation resulted from price movements in recreational goods & services, furniture & household goods, and alcoholic beverages & tobacco Goods price inflation in January 2014 was 1.4%, well below the 2.4% rate for services Commenting on the inflation figures for January 2014, published today by the ONS, David Kern, Chief Economist at the British Chambers of Commerce (BCC) said: -The fall in inflation is very good news for businesses and consumers, and will strengthen the case for the Bank of England's revised forward guidance policy that an early rise in interest rates is neither necessary nor likely. An economic environment of low inflation and low interest rates allows people and firms to plan ahead, as they can be confident they will not encounter any unwelcome surprises. -The economy still faces many challenges, and every effort must be made to bolster the recovery. But since our current forecast suggests that inflation will remain at around the 2% target, it is now up to the Chancellor to use next month's Budget to implement measures to boost enterprise and wealth creation.

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