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16th August 2023

Chambers comment on inflation

Inflation dropped to 6.8% in July, the lowest rate in 15 months.

Paul Butterworth, CEO at Chambers Wales South East, South West and Mid, said:

“Businesses in Wales have regularly cited inflation as a key concern in our Quarterly Economic Surveys, so today’s news that inflation has decreased by 1.1% to 6.8% in July is encouraging.

“This drop is mostly driven by energy demand being low over the summer. However, decreases in the consumer price index (CPI) for goods and services and food inflation have also played an important part. As these two factors have stubbornly contributed to slow growth and the cost-of-living crisis, even small movements in these figures are welcome and provide tangible benefits to business owners as they look ahead.

“Despite this positive news, wage inflation continues to exist as a real difficulty for many businesses in Wales and presents itself as another growth barrier, along with skills development and training, at a time when businesses are consistently struggling with recruitment. In Q2 of 2023, 71% of Welsh businesses experienced difficulties finding suitable staff and 73% cited that their organisations are under pressure to raise prices due to labour costs.

“Businesses can look at today’s inflation figures and be cautiously optimistic, but there is still a long way to go before they can invest in skills and long-term growth with confidence.”

Alex Veitch, Director of Policy at the British Chambers of Commerce, said:

“Today’s news that consumer price inflation continued to ease in July is encouraging. However, this comes off the back of months of high prices which have hit business hard. Many firms have yet to see the cost of raw materials fall.

“Businesses tell us that confidence is improving slightly as inflationary pressures ease. However, our latest quarterly economic survey showed most companies reported no improvement to sales, cash flow, or investment.

“High interest rates are now of real concern to firms. Investment across all sectors is suffering because of the cost-of-borrowing. Businesses need to be confident that interest rates have reached their peak.”

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