British Chambers of Commerce: Inflation will remain below target until well into 2016
• Annual CPI inflation in July 2015 was 0.1%, up from 0% in June 2015
• A smaller fall in clothing prices on the month, compared with a year ago, was the main contributor to the rise in inflation
• Falling prices for food and beverages partially offset the rise
• Inflation on goods in July 2015 was -1.8%, while inflation in services was +2.4%
Commenting on the CPI figures for July 2015, published by the ONS, David Kern, Chief Economist at the British Chambers of Commerce, said:
“These latest figures confirm the recent pattern of inflation staying around 0% and we expect this trend to continue over the coming months. Our forecast is that inflation will start edging up slowly towards the end of this year, but will remain well below the 2% target until the second half of 2016.
“Low inflation gives a boost to households and businesses alike and will help support our economic recovery.
“With low inflation expected to be around for some time and the world economy remaining uncertain, there is no need for the MPC to make a premature move to raise interest rates. We urge the MPC to keep rates at the current level until well into 2016.”