Fall in inflation reinforces case for low interest rates

17th May 2016

The Consumer Prices Index rose by 0.

3% in the year to April 2016, down from 0.5% in the year to March. Falls in air fares and prices for clothing and vehicles were the main contributors to the decrease in the rate. These downward pressures were partly offset by rising prices for motor fuels and recreational goods. Commenting on the UK inflation figures for April 2016, published today by the ONS, David Kern, BCC Chief Economist, said: -After last month's bigger than expected rise in the inflation rate, April's fall will ease concerns that inflationary pressures may be strengthening. The weakening in service price inflation to less than 2.5%, and goods price inflation remaining in negative territory, reinforces the subdued outlook for inflation. -While the Bank of England's current monetary policy is conducive to maintaining stability, boosting business confidence will require much greater efforts on the part of the government to support growth at a time when the economy faces many headwinds.