Following this morning’s inflation data from the Office for National Statistics (ONS) experts have warned that businesses across the UK are still facing challenging times.
Wages across the economy are still rising robustly and high costs continue to burden businesses.
Mark Grant of UK-wide business finance broker, The Business Finance Branch, said: “The shadow of Tuesday’s record wage growth data hung over Wednesday’s inflation figures, and the drop in CPI for July just widened the gap by which wages are now growing above the headline inflation rate.
“The Bank of England has already stressed this is a major concern for them. Business confidence will remain subdued in advance of further wage growth data and the rate-setting decision in September.
“It also pays to remember that prices are not falling, just rising less quickly, so companies’ finances are still getting stretched while their staff look for higher wages to handle the cost of living crisis. Many businesses are still in a phenomenal financial bind.”
Ian Hepworth, director of Croydon-based Funding Solutions UK, added: “Inflation is coming down, which is a positive, but millions of small businesses are still in a brutal place. There’s every chance now that the base rate will rise further, which will pile even more financial pressure on businesses. Things are improving but they’re improving slowly and for many businesses, the clock is ticking.”
And Samuel Mather-Holgate of Swindon-based advisory firm, Mather & Murray Financial, concluded: “Slowing inflation is great news for business and CPI is down more than expected. Some thought core inflation may have risen slightly, but that remained constant in the barrage of good news the Office for National Statistics delivered to UK plc this morning.
“This could signal a change in rate policy by the Bank of England and that would mean a seismic shift in business sentiment.
“If the Monetary Policy Committee keeps rates on hold at their next meeting, you will see a significant pop in business activity as the light at the end of the tunnel finally starts to shine.”
