• Swindon & Wiltshire News
• Wednesday May 24 2023
• Author Name: Peter Davison

Swindon business leaders get inflation briefing from Bank of England

Business leaders in Swindon received a briefing on inflation from the Bank of England on Tuesday (May 23) – the day before it was confirmed that inflation was falling for the first time since August.

A Thames Valley Chamber of Commerce meeting at the Swindon offices of chartered accountants Monahans was addressed by Jamie Barber, deputy agent for the south-west at the Bank of England.

The fifty business leaders in attendance included professionals from the banking, accountancy and property sectors.

Jamie – a liaison between businesses and the interest rate-setting Monetary Policy Committee at the Bank of England – reminded delegates that rising inflation had been sparked by the pandemic, and exacerbated by Russia’s invasion of Ukraine, which had sent wholesale energy prices spiralling.

Inflation, he said, was “too high – around 10 per cent since last summer.” The Bank of England had been increasing interest rates to “Make sure inflation falls and stays low.”

But the peak, he said, had probably passed.

He said policymakers were confident their rate-rising plan was working. “We expect inflation to fall quickly this year to five per cent by the end of the year and two per cent between the end of 2024.”

He said the picture was looking more positive than it was last autumn. “In November we were expecting a recession; now we aren’t,” he said. “GDP growth is broadly flat – which is a good news story compared to what we expected.”

He said that some inflationary pressures, like the “big step-up in energy costs” would be “dropping out of the system” as one-year anniversaries of ‘big shocks” were reached.

Other pressures – the cost of food, which is pushed upwards by higher production costs last season – were likely to continue rising, as were higher wages and the associated higher service price costs.

On Wednesday (May 24), the Office for National Statistics announced that inflation in April was running at 8.7 per cent – meaning prices were still rising, but at a slower rate.

David Bharier, head of research at the British Chambers of Commerce – of which Thames Valley Chamber is a part – said: “Today’s CPI rate of 8.7 per cent indicates that after several false starts, the peak in inflation looks to have passed.

“But this does not mean the problems caused by inflation will suddenly go away. Prices continue to rise from an already high base, after 18 months of price shocks.

“The last year and a half has had a devastating impact on many small firms who were just starting to see activity bounce back following the removal of Covid restrictions.

“With the interest rate currently at 4.5 per cent, widespread skills shortages, and trade frictions on the rise, the cost of doing business is the highest in years.

“Action by the Government to help with the squeeze on the labour supply, reform of business rates and support on exports would go some way to helping them face the future with more confidence.”

One of the earliest warnings that inflationary pressures were becoming a major issue for businesses came from the British Chambers of Commerce’s Quarterly Economic Survey, a barometer of business sentiment which is used as a benchmark by Treasury and the Bank of England.

The fieldwork for the Quarterly Economic Survey for Q2 2023 is being carried out now, and runs until June 6. To take part, visit https://r1.dotdigital-pages.com/p/3037-FCK/quarterly-economic-survey