West Midland business leaders have described the rise in inflation to 4.4 per cent as a “huge setback” for firms in the region.
Birmingham Chamber of Commerce Group’s latest quarterly economic survey showed that 20 per cent of manufacturers and 24 per cent of service businesses said that inflation was their biggest concern.
The chamber’s comments Consumer Prices Index (CPI) measure of inflation rose to 4.4 per cent in July, according to official figures.
The headline rate of Retail Prices Index (RPI) inflation remained unchanged at 5 per cent.
Christine Braddock, president of Birmingham Chamber of Commerce, said inflation is damaging because it eats into profits as consumers spend less.
“Gas and electricity prices and the pending increase in train tickets are likely to push the Consumer Price Index up to 5 per cent by the end of the year,” she said.
“However, raising interest rates from the current rate of 0.5 per cent is not the answer.
“The main causes of inflation are international and therefore beyond the control of the Bank of England or the Government.
“Both China and India are suffering with high inflation.
“This is the 20th month that inflation has missed the Bank of England’s target of 2 per cent and businesses and consumers have really been feeling the pinch.
“However we do expect Inflation to begin to fall over the next two years before dipping below the Bank of England’s target.”