Commenting on the Office for National Statistics inflation figures for August 2022,  Director of Policy and Public Affairs, Alex Veitch, said:  

“This rise in Consumer Prices Index inflation by 9.9% confirms the sustained pressure businesses and consumers have been facing over the past year. 

“This is also reflected in the squeeze on businesses’ operating costs as Producer Price Inflation figures remain at record highs of 20.5% in the year to August 2022. 

“While the rate of growth has eased slightly, this has been driven by a fall in motor fuel costs – other goods continue to rise.

“There is a limit to how long any firm can sustain these rising costs before something has to give. We know from our research that two thirds of businesses plan to increase their own prices. 

“The size of last week’s Government intervention on energy prices should have a dampening effect on inflation when it is enacted.  

“But the lack of detail on exactly how much help any individual business will get, and for how long, means very few will be planning to invest any time soon. 

“There are also a whole host of other issues ranging from transport and shipping costs, raw material prices, energy sector regulation and the tight labour market that must be addressed. 

“It is imperative the Government’s forthcoming ‘fiscal intervention’ provides business with confidence that there is a cohesive plan to take the economy forward.”  

Commenting on today’s Bank of England interest rate rise, David Bharier, Head of Research at the British Chambers of Commerce (BCC), said:  

“The decision by the Bank of England to raise the base rate to 2.25% is further evidence they are taking a hard line on tackling inflation. Our research shows that unrelenting inflation, largely driven by rising energy costs, is by far and away the top business concern at present. 

“But the Bank faces an increasingly tricky balancing act. The interest rate is a very blunt instrument to control inflationary pressures that are largely driven by rocketing energy costs and global supply chain disruption. The Bank’s decision to raise rates will increase the risk for individuals and organisations exposed to debt burdens and rising mortgage costs – dampening consumer confidence. 

“Recent energy price cap announcements will have provided some comfort to businesses and households alike and should place downward pressure on the rate of inflation. 

“Friday’s fiscal statement by the Chancellor is now a critical moment. He has the unenviable task of shoring up the economy whilst avoiding additional  inflationary stimulus. 

“The Bank, looking to dampen consumer demand, and Government, looking to increase growth, could now be pulling in opposite directions. 

“What businesses will want to see is a plan to address the short-term drivers of inflation as well as a long-term strategy to promote investment that gives them confidence for the future and counteracts the recessionary pull of rising interest rates.”   

Reacting to the World Trade Organisation’s (WTO) World Trade Report 2022 released at COP27, Nova Fairbank, CEO at the Norfolk Chambers of Commerce, said:

“World leaders will do well to pay attention to this report. The WTO’s call to action is clear – trade in environmental goods and services to mitigate climate change is also good for Norfolk jobs, productivity and investment.

“It is so important that we seize this moment now; any failure to raise levels of green trade will otherwise damage supply chains, lead to production shortages, and weaken infrastructure in the future.   “We need to see a step change in the political response. The report finds green trade has multiplier effects in achieving the transition to low-carbon technologies across the world. Reducing tariff and non-tariff barriers now, could increase green exports by 5% by the end of the decade and cut global emissions too. 

“Business is ready to meet this challenge – but we also need global leaders and trade ministers to step up and provide the trade opportunities that allow us to develop growth and lower carbon emissions hand-in-hand.”

An executive summary of the WTO World Trade Report 2022 can be found here.

Image: Chamber Canva Pro 2022