Responding to the latest inflation data, published on April 22nd by the Office for National Statistics, David Peña, Director of International Trade at Chambers Wales South East, South West and Mid, said:

“The latest 3.3% inflation figure for March is an early signal that the Iran conflict is feeding through into official data and impacting the UK economy.

“Transport is the biggest contributor to the increase, driven by the rapid rise in fuel costs, though food and household energy inflation are yet to be captured.

“But the inflationary path also reflects cost pressures that were building long before the latest shock. BCC data in Q1 showed 73% of businesses were already citing labour costs and 54% energy costs as inflation drivers.

“With spiralling energy costs and sustained supply chain disruption, the March inflation figure is more likely to be a floor than a peak.

“The Bank of England faces a stagflationary dilemma. Cutting rates risks embedding inflation but holding or raising them could wreak major damage on an already fragile economy.

“The UK government’s extension of support for energy-intensive firms is a necessary step. But it must move with similar urgency on the other major cost pressures bearing down on business, particularly business rates and employer National Insurance.”

David added: “Closer to home, the Welsh economy will also be affected by the results of the Senedd elections next month. It will be interesting to see how optimistic our members are, once we know which party forms the next Welsh government.”