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20th March 2024

Chambers react as inflation falls

Inflation has fallen to 3.4%, the lowest it has been since September 2021.

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

“Today’s good news that inflation has fallen to 3.4% will come as a relief to businesses and consumers alike. Over half of businesses in Wales had cited inflation as a key concern in our Quarterly Economic Survey in Q4 of 2023.

“This is a step in the right direction with regards to meeting the government’s 2% target. However, prolonged high inflation rates over the last two years have meant that prices have stabilised at a higher level and, coupled with high interest rates which are not expected to change significantly in the short-term, business uncertainty remains.

“Businesses will be hoping that the downward trend continues and begins to have an immediate impact on interest rates in the coming months to provide better economic conditions to plan, invest and grow Welsh business with confidence.”

David Bharier, Head of Research at the British Chambers of Commerce, said:

“Today’s easing of the CPI rate to 3.4% will give businesses and consumers some sense of relief. At 4.5%, core inflation has also slowed, and the producer price index for input costs remains negative at –2.7%.

“These positive trends were to be expected as many of the key drivers have begun to fall away.

“However, we are now two years into this inflation shock and prices have simply stabilised at a much higher level. Uncertainty for businesses remains high. Further rises in the minimum wage are likely to impact pay differentials, and the ongoing crisis in Gaza, alongside shipping disruption in the Red Sea, is a source of great instability.

“It is also a concern that the owner occupiers’ housing (OOH) component of CPIH has risen by 6.0%, indicating the adverse impact of higher interest rates. This measure is likely to be exacerbated by further council tax rises.

“The fundamental issues for SMEs still remain – skills shortages, a lack of infrastructure investment, and trade barriers, particularly with the EU, which all feed into GDP growth expectations of less than 1% for the coming years.”

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