IoD press release  Inflation stays on hold, but relief will be short-lived

“Inflation has once again come in lower than expected in May, as rising fuel inflation was offset by lower rates in other categories, like food, clothing and recreation and culture. Some recent policy measures will also help push down on inflationary pressures for households in the coming months, including temporary VAT reductions on leisure activities and the extension of the fuel duty freeze.

“Today’s steady inflation rate should be more than enough for the Bank to keep rates on hold this month. But even a swift end to the Iran conflict will leave global energy supplies disrupted and prices elevated for a considerable period, driving inflation towards 4% by the end of the year. To minimise the risk that inflation becomes embedded, government needs to think more deeply about the drivers of price increases. Rising energy, tax and employment costs affecting businesses need addressing if broader inflationary pressures are to be minimised.”