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Press Releases Policy publications - Productivity & growth

Inflation figures a relief, but cost of living squeeze not yet ‘firmly in rear-view mirror’

17 Oct 2018

cityResponding to official inflation figures, showing that the Consumer Price Index (CPI) fell to 2.4% in September, Tej Parikh, Senior Economist at the Institute of Directors, said:

“This should come as a relief for many households, but there’s still some way to go before the cost of living squeeze is firmly in the rear-view mirror.

“Coupled with the gradual up-tick in wages, the slowing rise in prices will deliver a boost to consumers’ real take-home pay packets, which will also be welcome news for retailers.

“The question is over how long these trends can last. Higher oil and utility costs are somewhat acting to hinder the fall in inflation, while productivity challenges and elevated regulatory costs are still limiting the wiggle-room businesses have to offer inflation-beating pay rises.

“The Autumn Budget is a crucial moment to knock down some of those obstacles, by delivering investment incentives and cost support for businesses to create the capacity for long-term wage growth.

“Meanwhile, the Bank of England will be unruffled by this week’s data releases, and remains unlikely to budge on interest rates as it continues to monitor the impact of Brexit developments.”

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