Inflation rate remains at 1.8%

The Consumer Prices Index (CPI) - a key measure of inflation - has stayed at 1.8% in July, according to the Office for National Statistics (ONS).

The CPI, the measure of the average price of consumer goods and services purchased by households, had been expected by economists to decline to 1.5%.

The Retail Prices Index (RPI) inflation measure, which includes mortgage interest payments, also unexpectedly rose to -1.4% in July from the previous month's -1.6%.

Although these figures are positive news for the economy, many economists are still predicting that inflation will continue to drop.

"We expect that this halt in the downward trend in inflation will prove to be only temporary,' said Vicky Redwood, an economist at Capital Economics.

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Record low interest rates must stay

A third of entrepreneurs have seen a positive impact on their business from the Bank of England’s decision to keep interest levels low, according to research from Tenon, but any signs of recovery remain fragile.

Commenting on today’s MPC decision, Andy Raynor, chief executive of Tenon Group, said:

“Maintaining this low rate of interest is good news for entrepreneurs as a third have found the lowering of interest rates to be beneficial to their business. However, any expectations of recovery this year may require additional stimuli as many entrepreneurs are still struggling to get back on their feet.

“Low interest rates are highly beneficial for small businesses, but these levels must remain in place for a considerable period of time. It is too early to be certain of any economic recovery this year and a rise in interest rates would be disastrous for confidence in the foreseeable future.”

The Group, which offers specialist advice to entrepreneurs, also found that those in Scotland have seen the most benefit from the cuts - 43% have seen a positive impact on their firms.

Source: Tenon

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