Comment on Inflation Figures
Commenting on today’s publication of inflation data by the Office for National Statistics, Christian Spence, Head of Research and Policy at Greater Manchester Chamber of Commerce, said:
“The latest data confirms our expectations of an increase in the headline rate of CPI inflation to 2.9%, up from 2.6% in July. All categories of goods contributed to the rise in August’s price data, and factory gate prices rose faster in August at 3.4% than the previous month, caused by higher oil and petroleum prices that have seen producer’s input costs rising 7.6% in the past year.
“We have long maintained that inflation will be the key economic story for 2017 and this continues. Whilst our expectations are that overall inflation is not likely to peak towards the end of 2017 at around 3% rather than our previous estimates of around 3.5% in early 2018, these increased costs are placing pressures on both businesses and consumers. Real-terms wages are now falling which is affecting the strength of the consumer economy and, whilst some exporters are benefitting from the weakness of Sterling to either grow their sales or improve their margins, overall the UK economy will suffer from the depreciations of Sterling as the higher costs of imported goods outweigh the advantages to overseas sales.
“Our current forecasts for UK GDP growth of 1.6% in 2017 and 1.5% in 2018 will be revised alongside the results of our Quarterly Economic Survey at the end of September though, as we work through the revision process, our judgement is that the downside risks to the UK economy overall have increased over the past three months."