A surprise fall in inflation to 1.7% will be good for Liverpool city region businesses, says chamber chief executive Paul Cherpeau. Tony McDonough reports

Paul Cherpeau, chief executive of Liverpool Chamber of Commerce. Picture by Gareth Jones

UK inflation fell to 1.7% in September, new figures show, and Liverpool Chamber chief executive Paul Cherpeau says this could be good news for local businesses.

Lower air fares and petrol costs were the main driver of the fall, which was unexpected. It means prices are now increasing at a rate that is below the Bank of England’s target of 2%. It makes further cuts in interest rates more likely before the end of 2024.

However, food and non-alcoholic drink prices did rise in September with costs up for milk, cheese, eggs, soft drinks and fruit. It  was the first time food price inflation had risen since March 2023.

“Today’s announcement that CPI has dropped below the Bank of England’s target of 2% for the first time since April 2021 is cause for optimism for businesses across Liverpool,” said Paul Cherpeau.

“Many will be hoping this paves the way for a cut in interest rates, lessening the pressures for SMEs who have felt the pinch of high interest rates, high inflation and stifled cash flow affecting their ability to invest.

“However, business leaders will undoubtedly remain cautious in the coming months. Our latest Quarterly Economic Survey results indicated that 50% of Liverpool-based respondents expect price rises within the next three months.

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“It reveals 75% reported labour costs are a substantial cause of anticipated price inflation – much more than utilities, raw materials or financial costs. The lower levels of CPI announced today may lessen some of these concerns.

“But in light of recent announcements around reforms to taxation and the impending Budget – plus the fragile situation in the Middle East – many business leaders here will be watchfully waiting to see how the situation develops over time.”