Inflation rate rises

Dr Brian Sloan, Chief Economist at Greater Manchester Chamber of Commerce

The Office of National Statistics figures released today for annual inflation to October show that the Retail Prices Index sharply increased to 3.2% from 2.6% in September and the Consumer Prices Index has increased to 2.7% from 2.2%.

Commenting on these figures, Dr Brian Sloan, Chief Economist at Greater Manchester Chamber of Commerce, said: “As we anticipated inflation appears to have bottomed out and this month’s sharp rise indicates that there is little chance of inflation falling below the 2% target as the Bank of England expected. This means that consumers, seeing typical pay increases of less than 2%, continue to feel the squeeze and this will hit demand for retailers.

“There will also be a knock on effect in supply chains should demand weaken as a result of the squeeze in the run up to Christmas. Some of the key drivers are fuel and food prices, essentials for any household, along with tuition fees. Inflation had fallen in part as a result of heavy discounting of more discretionary spend items and lower import prices have also helped to keep prices down, but there is further pressure ahead from energy price increases.

"Businesses are experiencing difficulty with fuel prices and the volatility of raw material prices and exchange rates that will add further pressure in the months ahead. Our Quarterly Economic Survey for the fourth quarter is now underway and will go some way to determining the true economic picture for business performance in the region and price pressures at this very moment in time.”