Inflation rise will "add to the strain" of Birmingham firms says chamber of commerce

The latest report from the Office For National Statistics showed inflation jumping from 2.5% to 3% in January, its highest figure in nearly a year.

The latest inflation rise was higher than the 2.8% predicted by economists and well above the Government's target rate of 2%, and was said to be driven by the rising cost of food and non-alcoholic drinks. 

Emily Stubbs, head of policy at Greater Birmingham Chambers of Commerce, said the need for the Government to ease cost pressures on businesses was now "desperate". 

“Today's data only highlights the mounting cost pressures facing businesses across the country - and the Chancellor's national insurance contribution increases will only add to the strain," she said.

"Our Quarterly Business Report consistently finds that labour costs are already the most persistent source of cost pressures on Greater Birmingham businesses - something yesterday's wage data is yet another reminder of.

“We published additional research earlier this month which found that six in 10 local businesses are anticipating having to increase their prices further to mitigate the impact of the Autumn Budget.

"Businesses desperately need some of these cost pressures eased in order to unlock investment and drive economic growth.

"The Bank of England is likely to continue proceeding cautiously with further interest rate cuts in the coming months, as it navigates the inflation landscape amid ongoing global risks and the impact of potential US tariffs."

The British Chambers of Commerce said it underlined the ‘real challenges’ businesses were currently facing from inflationary pressures in the economy.

Stuart Morrison, research manager at the British Chambers of Commerce, added: “Our latest research shows a spike in the proportion of firms expecting to raise prices following the Autumn Statement, while business confidence has dipped to 2022 levels.

“Overall, 75% of businesses cited labour costs as a main driver of price hikes and yesterday’s wage data is another reminder of that. 

“The inflation landscape, coupled with ongoing global risks and the looming threat of US tariffs, is likely to give the Bank of England more food for thought, as it charts a cautionary path to further interest rate cuts.”