Inflation figures an ‘unexpected plus for the economy’ – IoD

Responding to official inflation figures, showing that the Consumer Price Index (CPI) remained at 1.9% in March, Tej Parikh, Senior Economist at the Institute of Directors said:

“The stability in the cost of living is an unexpected plus for the economy, complementing recent improvements in pay packets.

“Inflation is however unlikely to stay below the 2 percent target for much longer. With the rise in wages and firms reporting higher costs, we are likely to see upward pressure on prices over the coming months. This may dampen the mood of consumers somewhat, and reminds us that although salaries have been increasing, in real terms people’s earnings remain below pre-crisis levels.

“Flat inflation makes it easier for the Bank of England to justify leaving interest rates unchanged in the near term. The MPC will also be taking note of emerging price pressures on the horizon, but it remains straitjacketed by political uncertainty, and will probably not budge until it gets a clearer indication of how Brexit will play out.”