Lower inflation will benefit businesses and consumers

21st May 2013

Annual CPI inflation was 2.

4% in April 2013, down from 2.8% in March  Commenting on the Consumer Price Index (CPI) for April 2013, published today by the ONS, David Kern, Chief Economist at the British Chambers of Commerce (BCC) said: -The drop in inflation to 2.4% in April is the first time that a slowdown has been recorded since September 2012. This is welcome news, and will ease pressures facing businesses and consumers. The largest downward contribution to inflation in April came from transport costs, notably motor fuels and airports.  -Although there are still risks that inflation may edge up in the next few months, it is now unlikely that we will see an increase to 3% as previously feared. It is reasonable to expect modest declines in inflation in the fourth quarter of this year, and through to 2014. However falls in sterling could still pose risks to inflation over the year ahead, particularly if the MPC adopts much more expansionary policies and increases QE. We believe that the economy needs a period of falling inflation so that domestic demand can stabilise as exporters are hampered by global challenges, particularly in the eurozone.