Fall in inflation may only be temporary – Chamber

UK inflation fell unexpectedly to 2.6 per cent in the year to March, according to new figures released today.

However, Greater Birmingham business leaders say the easing of inflation may only be temporary due to tax increases kicking in during April, along with the uncertainty caused by US president Donald Trump’s tariffs.

The Office for National Statistics (ONS) said falling petrol prices helped to drive inflation down from 2.8 per cent.

The average price of petrol fell by 1.6p per litre between February and March to 137.5p per litre.

The inflation decrease was also driven by a drop in recreation and culture prices, with toys, games, and hobbies falling particularly sharply.

The fall in inflation means that, although prices continue to rise, the pace is slowing.

Raj Kandola (pictured), director of external affairs at Greater Birmingham Chambers of Commerce, said: “Confounding city analysts projections, it’s pleasing to see that inflation has fallen for the second month in a row. However, major challenges remain on the horizon.

“At the start of April, we’ve seen the National Insurance hikes and changes to the minimum wage kick in, coupled with the uncertainty caused by President Trump’s tariff regime. The fact remains that inflation is likely to climb again in the coming months.

“Early analysis from our Quarterly Business Report revealed that dealing with rising costs remains a daily battle for many businesses especially in relation to hiring staff and paying energy bills.

“With private sector pay continuing to rise and the potential inflationary shock caused by the new tariffs, the prospect of the Bank of England cutting interest rates grows stronger by the day.

“However, firms will also want to see the Government set out a clear plan around reducing these cost pressures across areas such as international trade, employment and business taxes ahead of the Autumn Statement.”