Commenting on the latest UK inflation figures showing CPI increasing from 2.6% to 2.9%, Liz Cameron, Chief Executive, Scottish Chambers of Commerce, said:

“These latest figures which show that inflation has increased can be largely attributed to the rising price of clothing and footwear, with the import-intensive nature of the industry and the exchange rate pressure which arises through the supply chain, driving the increase.

“Additionally, prices at the factory gate are increasing and with CPI inflation continuing to outpace pay increases, this will raise some concerns for businesses when it comes to the availability of consumer spending. We are hearing early signs from members, although not widespread, of increasing costs being passed down the supply chain and potentially to the end consumer.

“With this in mind, and with only modest GDP growth, the Bank of England should hold steady on raising interest rates.”

Commenting on the news that Scottish employment rose by 30,000 (1.1%) and unemployment fell by 12,000 (0.5%) in the three months to June, Liz Cameron, Chief Executive, Scottish Chambers of Commerce, said:

“The overall employment figures remain strong, with a new record high employment rate of 75.2% and an unemployment rate of 3.9%. At a time of heightened political and economic uncertainty, the labour market figures are encouraging, showing the commitment and resilience of business to hire and invest in their workforce.

“Although the overall employment rate of 75.2% is the highest since Scottish records began, there are some continued challenges. Strong labour market figures are still not translating into increased productivity or the sort of wage growth that we would normally be seeing with fewer people out of work. This persistent lack of increased productivity and wage growth will add further pressure on consumer demand, business margins and future business investment.

“Additionally, Scotland’s economic inactivity rate remains unchanged from the same period last year, adding further impetus to business and Government to invest in training and upskilling opportunities as a way of encouraging individuals to re-join the workforce. It also reinforces the need for Scottish business to have continued access to a skilled workforce from the EU and beyond as negotiations take shape between the UK and the European Union.”

Today’s news that inflation has jumped to 2.7% has confirmed long-held expectations and highlighted growing concerns over the capacity for businesses to contain rising costs and the potential threat to consumer demand, as disposable incomes become squeezed. Liz Cameron, Chief Executive of Scottish Chambers of Commerce, said:

“Whilst part of the reason for this latest increase in inflation might be due to the timing of Easter and the consequent impact on the cost of flying, the fact remains that there are continued upward pressures on prices from a range of sources and the Bank of England last week said that it expected inflation to continue upwards to almost 3% later in the year.

“The impact on Scottish business and the Scottish economy is two-fold. Rising prices impact on businesses’ costs and their ability to invest and create jobs, whilst weakening real incomes could depress consumer spending, which has been the strongest driver of economic growth in Scotland over the past few years.

“These challenges, coupled with ongoing political uncertainty represent a risk for the Scottish economy, which our politicians must respond to. With a General Election campaign in full swing, politicians of all parties must remember that it is Scotland’s businesses that are the creators of jobs, wealth and growth in our economy, and businesses will be examining the various Parties’ plans to address this situation with keen interest.”