LOW INFLATION REINFORCES CASE FOR PERSEVERING WITH LOW INTEREST RATES
September 15 2015.



- Annual CPI inflation in August 2015 was 0%, slightly down from 0.1% in the year to July 2015.

- A smaller rise in clothing prices on the month, compared with a year ago, was the main contributor to the slight fall in inflation. Lower fuel prices was also a factor, while rising prices for soft drinks and furniture partly offset the fall.

- Inflation on goods in August 2015 was -2.0%, while inflation in services was 2.3%.


Commenting on the CPI inflation figures for August 2015 published today by the ONS, David Kern, Chief Economist at the British Chambers of Commerce said: “The latest figures confirm the recent pattern of inflation staying around 0% and we expect this will continue over the next few months. Our forecast is that inflation will start edging up at the end of this year, rising slightly but remaining below the 2% target until the middle of 2017.

“Low inflation supports living standards by boosting disposable income and will help to sustain the economic recovery. However, last week’s poor trade and manufacturing figures show that the recovery is still fragile, particularly in the face of major global uncertainties.

“The prospect of continuing low inflation and global uncertainty should give the MPC no need to contemplate a premature increase in interest rates. We urge the MPC to keep rates at their current level until well into 2016.”