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East Midlands Chamber News

Chamber Reaction To Inflation Surge

UK inflation rose to 3.7% in April, according to the latest official figures. The Office for National Statistics' consumer prices index (CPI) now stands at more than 1.5 percentage points above the official target of 2%.

The jump triggers an open letter from Bank of England governor Mervyn King to new Chancellor George Osborne to explain why inflation remains above the official target of 2%. Increased fuel prices, rises in alcohol and tobacco duty and the cost of food and clothing all combined to push consumer price inflation to its highest level since November 2008.

Commenting on the figures, George Cowcher, Chief Executive of the Derbyshire and Nottinghamshire Chamber of Commerce, said: "Given the weak economy and the serious pressures still facing businesses, it would be wrong for the Bank of England to over-react to this rise in inflation, which could very well be temporary.

"Deficit reduction, to deliver confidence and low interest rates, to encourage investment are the key elements crucial to the recovery. In particular, the Chamber believes that interest rates should not rise.

"We now await June's Emergency Budget with interest to see how the new government plans to reduce the unsustainable budget deficit. If the market regains confidence in the UK's ability to deal with the deficit, it will be easier to maintain low interest rates and make it possible for businesses to drive and sustain the economic recovery."