FALLING INFLATION GOOD FOR BUSINESS AND CONSUMERS SAY BCC
May 22 2012.


Commenting on the inflation figures for April, published today by the ONS, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said: "The CPI figures for April showed a decline in inflation of 0.5 percentage points, which is welcome news for businesses and consumers. RPI inflation only eased marginally by 0.1 percentage points, though it's difficult to know at this stage whether this is due to a statistical quirk, or more substantive reasons. The fall in inflation will ease the pressures on businesses, and if the downward trend continues it would hopefully enable an increase in consumer spending later in the year.

"Inflation remains well above the official target of 2%, and the government must look at ways of supporting businesses, while sticking to its plan to reduce the deficit. The decline in inflation should not strengthen calls for an increase in Quantitative Easing (QE) at present. However, a further increase in QE might be necessary if the eurozone crisis deepens further and creates difficulties for the banking system.

"The government and the MPC must look to ensure that the additional liquidity created by previous increases in QE improves the flow of lending to viable businesses. We urge the government to consider the creation of a business bank, and the MPC must reconsider its reluctance to purchase private sector assets."


- Annual CPI inflation down from 3.5% in March to 3.0% in April

- Annual RPI inflation down from 3.6% in March to 3.5% in April