Inflation figures released for December

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

The Office of National Statistics inflation figures show that the CPI inflation measure remained at 2.7% in December and the RPI measure increased slightly from 3% to 3.1%. 

Commenting on the figures, Dr Brian Sloan, Chief Economist at Greater Manchester Chamber of Commerce, said: “Within the detail of these relatively stable headline inflation numbers there are some significant moves for consumers and businesses. As we have highlighted before, the continued upward pressure on energy prices and utility bills will cause pressure on businesses and households, in the latter case further depressing consumer spending.

"The particularly wet weather over the past year that led to poor harvests continues to be felt in increasing food costs, though there is some welcome relief from motor fuel prices which have fallen back over the past couple of months. Heavy discounting from retailers in the run-up to Christmas also had a downward effect on the prices of clothing and footwear, but this puts a squeeze on retailers.

“We continue to see the likely path of inflation over the coming year as one that continues to nudge up over the coming months before easing again in the second half of the year. Although inflation will fall back we are expecting it will remain above the Bank of England’s 2% target. Many of the sharper downward pressures in today’s statistics are caused by prices rising less quickly than a year ago and the monthly comparison has shown an increase of 0.5% from November to December.

"Inflation will continue to weaken the recovery and though we are making progress, growth will remain slow during 2013. Job losses over the coming months as result of public sector cuts, seasonal workers released after Christmas and losses from business failures will weigh on consumer confidence, but we must support business confidence and investment as a number of projects are getting underway that will help support the competitiveness of our region moving forward.”