BUSINESS leaders in Huddersfield have called for further cuts in the cost of borrowing after new figures showed a surge in the inflation rate.
Steven Leigh, senior policy adviser for the Lockwood-based Mid Yorkshire Chamber of Commerce, said efforts to prevent the country slipping into recession had to take priority over concerns about rising prices.
He said the Bank of England’s monetary policy committee should reduce the base lending rate by 0.25% to 4.25% next month and aim to bring the rate down to 4% in coming months.
Mr Leigh added: “We have been campaigning for some months for the committee to cut interest rates in order to give our economy a much-needed booster jab and increase business confidence.”
His comments follow new figures from the Office for National Statistics show the Consumer Price Index rose to 5.2% last month – the highest CPI reading since 1997 – reflecting the recent upsurge in food and energy costs.
David Kern, economist for the British Chambers of Commerce, said the increase was higher than expected, but added: “With oil prices well below recent peaks and economic activity weakening CPI inflation is set to slow sharply over the next year, probably falling below the 2% target.”
He said interest rates should be cut to build on the positive effect of last week’s internationally co-ordinated lending rate cut and the Government’s move to pump billions of pounds into UK banks.
Mr Kern added: “The threat of recession remains higher in the short term than the risks of higher inflation.’’
The increase in the CPI comes as the headline Retail Prices Index reached a 16-year high of 5% in September.
The RPI, which excludes costs such as rent, council tax and mortgage interest payments, is used by the Government to calculate pensions and benefits, including Jobseeker’s Allowance and income support.