West Midland business leaders have welcomed the drop in the overall rate of inflation to a 15-month low last month.
The consumer prices index (CPI) rate of inflation dipped to 3.4 per cent, compared to 3.6 per cent in January, the Office for National Statistics said, helped by lower electricity and gas bills.
Cheaper air fares and discounts on digital cameras also pulled the CPI rate lower, but a record January to February rise in alcohol prices, driven by spirits, held back further declines.
Birmingham Chamber of Commerce Group has cited global instabilities as the key cause driving inflation, which they said has replaced competition as the biggest worry for trade.
Chamber President Michael Ward said: “Business concerns about competition from overseas have long since been replaced by inflation worries, but inflation figures are going in the right direction.
“The fall in CPI inflation is significant but still 1.4 per cent above the Bank of England’s target.
“We therefore ask the Bank’s Monetary Policy Committee (MPC) to resist any urge to raise interest rates for the foreseeable future and to consider extending its quantitative easing (QE) programme to cover the purchase of corporate bonds, not gilt.
“SMEs are missing out and not seeing the full impact of quantitative easing while it is limited to gilt buying.”
Mike Ashton, spokesman for the West Midlands Chambers of Commerce, added: “With interest rates so low, there is little that the MPC can do to stimulate the economy other than to expand its QE programme.
“The fall in inflation is attributed to energy cuts by some of the main utilities, as well as heavy discounting from non-food retailers. “Business is still suffering from the impact of the eurozone crisis and weak domestic demand.”
The drop comes as some economists warn that the overall rate of inflation may not pull back as quickly as previously thought amid resurgent oil prices, although the ONS said there was no evidence of this in February.
