Inflation has risen to 2.3%. This is above the Bank of England’s target of 2% and may impact decisions around cuts to interest rates in the coming months.

Gus Williams, Interim CEO at Chambers Wales South East, South West and Mid, said:

“Many businesses in Wales are undoubtedly delaying investment decisions due to a combination of weak growth and high interest rates, and the recent budget is also causing businesses to reassess their plans. The Bank of England is clearly still concerned there are inflationary pressures in the domestic economy, with global events, particularly stemming from the US, adding to the mix of uncertainty. These inflation figures will make the Bank of England’s job no easier.

“In the past we might have expected public investment to act as a spur to growth, but fiscal pressures will put a limit on this. Interest rates are not particularly high by historical standards but after getting used to years of very low rates it will take businesses time to readjust. Rising labour costs should act as a spur to investments in productivity, but we may not see this start happening until business confidence returns, which will be unlikely to happen until after we see what Trump’s administration’s policies are.

“Energy investments and construction growth are going to be a big factor in Wales and the hope is that these will stimulate broader economic activity but there are still policy hurdles to overcome. The current circumstances make the work of the Chamber even more important in connecting businesses across Wales to solve challenges, identify opportunities and help shape government policy.”

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

“While inflation is down considerably from this time last year, the larger than expected uptick in October highlights the continuing price pressures in the economy. Electricity and gas costs have risen sharply, with households facing challenges as we head into winter.

“Our research shows that while concerns about inflation have been steadily declining, it remains a significant issue for many businesses.  SMEs are now deeply concerned about rising costs on the horizon next year. The combined impact of national insurance and living wage rises, and the Employment Rights Bill is likely to put strong pressure on labour costs. Ongoing geopolitical conflicts and a potential tariff war will also have impacts.

“To help mitigate cost pressures, the government should look to accelerate the permanent cuts in business rates for retail, hospitality and leisure properties – currently scheduled for 2026. Much also depends on the government’s strategies on industry, infrastructure and trade. We need these plans to deliver at pace and help drive forward business growth across the UK.”