Inflations remains stubborn as headwinds persist

18 October 2023

The inflation rate held at 6.7% between August and September as a fall in food prices was offset by an increase in global oil prices.

According to the Office for National Statistics, food prices fell by 0.1%, led by dairy produce and soft drinks. The only food category that went up was fish, led by frozen prawns.

By contrast, petrol rose to an average of 153.6p per litre and diesel by 6.3p to 157.4p per litre, up from levels closer to 140p in June, although still well below the highs seen last year.

Oil prices rose last month after Saudi Arabia and Russia decided to cut production to support the global market, and events in Israel and Palestine have sparked fears of further increases.

Bharier, Head of Research at the British Chambers of Commerce, said: “Today’s figure, showing the CPI is stuck at 6.7%, shows that inflation for consumers remains stubborn. However, prices in the production sector continue to fall as the PPI rate stands at –2.6%.

“Our Quarterly Economic Survey has been showing a diminishing percentage of firms expecting their prices to rise for five quarters running, albeit this indicator remains at a high level.

But this is just part of the picture, as our research finds that most SMEs report no increases in sales, exports, or investment. The rise in interest rates has also emerged as a prime concern for almost half of businesses, with increased borrowing costs another barrier to contend with.

“Businesses need clarity on interest rates, as well as a longer-term plan for growth in the economy, focusing on infrastructure, skills, and alleviating trade barriers.”