Dr. Gavin Cameron, Reader in Macroeconomics, Oxford University, comments:
“Despite some speculation, it seems unlikely that last month's 'inflation surprise' of 3.1% will lead to an 'inflation panic' at the Bank of England. With energy bills set to fall this month and inflation generally likely to fall throughout the summer, it is possible that the Bank base rate will only need to rise by the predicted 0.25 percentage points this month, and then remain stable for the rest of the year."
"Although activity in the economy generally remains strong, recent rises in unemployment suggest that earnings growth (excluding bonuses) will remain subdued. The recent rise in the sterling/dollar exchange rate will also help to allay inflation fears."
“However, if inflation does persist and wage pressures do start to develop, it is likely that the consumer will have to bear the brunt of the adjustment. Consequently, the prospects for non-food retailers are perhaps a little worse than they were, especially since March's price rises in household goods are unlikely to have been sustained following the Easter sales and since like-for-like sales growth looks a little weaker than at the beginning of the year."
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British Retail Consortium
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