IoD press release  Iran conflict starts to show up in inflation data

“Upward pressure on inflation from the conflict in Iran is now starting to emerge in prices. Transport inflation made the biggest contribution to overall consumer inflation, driven by petrol and diesel prices, which rose by 4.9% on the year. Meanwhile, within producer input prices, crude oil prices rose by 58.8% between February and March. As inflation has come in in line with revised expectations, and given yesterday’s labour market data which showed a fall in vacancies and further downward progress in wage growth, interest rates should hold fast at next week’s MPC meeting. But there remains tremendous uncertainty over the outlook for energy supply and prices.”

“April has seen renewed pressure on business costs, with rises in the minimum wage, business rates, national grid charges, energy and financing costs. Against this backdrop, the need for the UK’s uncompetitive energy costs to be addressed is acute. Steps to reduce the influence that gas prices have on electricity prices are welcome, but yesterday’s announcements will not lead to a break between the two and so are unlikely to provide businesses with significant relief. Decisive action is needed to completely decouple electricity and gas, while in the short-term committing to using revenue from the increased EPL to reduce the non-commodity costs which constitute the majority of business energy bills.”