Inflation 'has almost certainly peaked'

Posted on 17 October 2008

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Small business owners and contractor may be buoyed by comments that inflation "has almost certainly peaked".

Capital Economics chief European economist Jonathan Loynes says a number of factors including falling oil prices will have "a disinflationary influence" on the UK economy.

He suggests food prices will also start to fall, potentially allowing contractors to conserve a greater proportion of their income.

Mr Loynes adds: "The forces that have been pushing it up over the last year or so are going into reverse."

Latest figures from the Office for National statistics showed that consumer inflation increased to 5.2 per cent in September, up from 4.7 per cent in August.

The most significant inflationary pressure came from rising gas and electricity bills.

At present the government's target for inflation is two per cent, with the governor of the Bank of England required to write a letter of explanation to the chancellor of the exchequer if inflation exceeds three per cent.

Category: General News

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