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Inflation ‘creates risks’ for UK economic recovery

The British Chambers of Commerce (BCC) has warned that rises in inflation over the coming months could jeopardise the UK’s economic recovery.

According to recent figures from the Office for National Statistics, annual CPI inflation remained unchanged at 2.7% in December 2012, while RPI inflation rose marginally, from 3% to 3.1%.

The greatest upward influence came from rising gas and electricity prices, although the effect was largely offset by a fall in the cost of fuel and air transport.

However, the latest economic survey from the BCC suggests that many business owners expect inflation to rise in the near term, as a result of further increases in utility bills and food prices.

The business group is calling on the Government to do more to support the economy and stimulate growth.

BCC Director General, John Longworth, said, ‘Higher inflation is clearly a concern for the UK economy as it increases the squeeze on both businesses and consumers, further exacerbating an already weak economic environment’.

‘Recent steps to improve access to finance, such as the commitment to create a business bank, are welcome, but must be implemented at scale and with clear timetables. This will help to build business confidence at a time when the economic climate they are operating in is highly uncertain.’