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Inflation continues to edge down

ended 16. August 2023

The latest inflation data has just been published (click here), showing the Consumer Prices Index (CPI) rose by 6.8% in the 12 months to July 2023, down from 7.9% in June and that core CPI (excluding energy, food, alcohol and tobacco) rose by 6.9% in the 12 months to July 2023, unchanged from June. Few Qs relating to the general business environment:

  • What does this data mean for small businesses (and their finance/financial strength)?
  • Is it a positive finally, or does the sticky core number pose a problem?
  • How important is it for business that inflation continues to drop?

2 responses from the Newspage community

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Mark Grant
Business Finance Adviser at The Business Finance Branch
The shadow of yesterday's record wage growth data hung over today's inflation numbers, and the drop in CPI for July just widened the gap that wages are now growing above the headline inflation rate, which the Bank of England has already stressed is a concern to 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.
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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
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 MPC keep 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.