Commenting on the inflation statistics for February 2019, published today by the Office for National Statistics, Suren Thiru, Head of Economics at the British Chambers of Commerce (BCC), said:
“Inflation picked-up for the first time since August 2018, with rising prices across a range of items including food and alcohol, placing the largest upward pressure on price growth in February.
“Inflation is likely to drift higher in the coming months as the expected increase in Ofgem’s energy price cap in April enters the calculation. Businesses also continue to report that the cost of imported raw materials are rising. As these high input costs filter through supply chains, they could increase the upward pressure on consumer prices in the short-term.
“Overall, the UK’s weakening economic outlook is likely to ensure that any increase in consumer prices would be largely transitory, and inflation is expected to remain close to the Bank of England’s 2% target for some time to come.
“With the current trajectory for inflation largely benign, there remains sufficient scope to keep interest rates on hold through this year, particularly against a backdrop of increasing anxiety over Brexit and slowing economic growth.
“The overriding priority must be for parliament to avoid a messy and disorderly departure from the EU, which would likely drive a marked drop in sterling and could significantly increase inflation and the cost pressure on businesses and consumers.”