INFLATION STILL A PROBLEM FOR BUSINESSES AND CONSUMERS
February 12 2013.



- Annual CPI inflation was 2.7% in January 2013, unchanged for the fourth consecutive month

- Annual RPI inflation was 3.3% in January 2013, up from 3.1% in December 2012

Commenting on the inflation figures for January 2013, published today by the ONS, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said: "The unchanged annual inflation figure was marginally higher than many analysts anticipated. Alcohol and air fares provided the largest upward pressures on the January figure, but this was countered by downward pressures from clothing and miscellaneous items. Since some increases in utility and food prices are still to come through in the next few months, we expect annual CPI inflation to edge up to a peak of around 3%, before falling in the second half of the year and in 2014. However, inflation is still adding to the squeeze felt by businesses and consumers. It has not been below the target since the end of 2009, and will remain a major obstacle to a sustainable recovery.

"Relatively high inflation is not good for the UK economy, at a time when the government implements tough fiscal policies. Given the difficulties of achieving rapid increases in exports, falls in inflation that boost real incomes could be an important factor in underpinning domestic demand. While there is no substitute for strong policies to boost growth, it is important that the MPC does not give the impression that it will be prepared to tolerate higher inflation in the near future."