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24th May 2023

Chambers react to drop in inflation figures

The Office for National Statistics has reported that inflation in the year to April has dropped to 8.7%.

Chambers Wales South East, South West and Mid believes that skills are critical to Welsh growth as inflation drops.

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

“It is encouraging news to see that inflation is finally starting to show a meaningful reduction as it hits 8.7%.

“The Chamber understands that the Bank of England has had to make difficult decisions for the UK economy to narrowly avoid a recession. The hard work isn’t over yet, and it is critical that policymakers in both Westminster and the Senedd work closely to offer the Welsh business community tangible support. The cost of doing business, food prices and energy bills remain very high and we would like to see the wholesale price reduction passed onto businesses soon.

“If this trend of inflation dropping continues, businesses will be more confident in the market and will be encouraged to grow and to thrive.

“While the economic pressures should begin and continue to ease a little this year, there are still barriers stopping businesses reaching their growth potential, not least skills. Without access to appropriate skills, businesses and the Welsh economy will continue to tread water.

“Now inflation is beginning to come under control, action by decision makers is required to support Wales on promoting skills, net zero, exporting and business rates, so we can continue to push for a prosperous Wales.”

The British Chambers of Commerce say that while inflation eases, cost pressures remain.

David Bharier, Head of Research at the BCC, said:

Today’s CPI rate of 8.7indicates that after several false starts, the peak in inflation looks to have passed. This is further evidenced by a significant slowdown in the producer price input rate to 3.9%. Falls in gas and electricity costs provided the largest downward contribution to CPI.

“But this does not mean the problems caused by inflation will suddenly go away. Prices continue to rise from an already high base, after 18 months of price shocks.

The last year and a half has had a devastating impact on many small firms who were just starting to see activity bounce back following the removal of Covid restrictions.

“With the interest rate currently at 4.5%, widespread skills shortages, and trade frictions on the rise, the cost of doing business is the highest in years. Action by the Government to help with the squeeze on the labour supply, reform of business rates and support on exports would go some way to helping them face the future with more confidence.”

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