Inflation is above the Bank of England’s two per cent target and is expected to rise further in the coming months before falling back to target, businesses in Coventry and Warwickshire have been told.
The Coventry and Warwickshire Chamber of Commerce held a regular roundtable event with Graeme Chaplin, the Bank of England’s Agent in the West Midlands, to discuss the issues firms across the patch are facing and to receive an update from the Bank.
Graeme heard from companies in manufacturing and the service sector on recruitment difficulties, supply chain issues and rising prices but also positive news around a return to pre-pandemic output levels.
He told guests at the virtual meeting that GDP was expected to return to pre-pandemic levels by the turn of the year and then grow gradually, while the unemployment rate was predicted to ease back slowly.
Graeme said: “The Bank will continue to set interest rates to support households and businesses and ensure inflation returns to target.
“We expect inflation to rise further in the coming months. As Covid restrictions have eased around the world, there has been a big increase in demand for certain products. Some businesses have struggled to meet this extra demand, which is pushing up costs and prices.
“But we don’t think that demand will continue to rise as fast, and we expect some of the difficulties businesses are facing in producing their products to ease. So, we expect inflation to fall back, reaching our two per cent target in around two years’ time.”
Sean Rose, head of policy at the Coventry and Warwickshire Chamber of Commerce, said: “It was great to receive an update from Graeme on the Bank of England’s forecasts and objectives.
“But this was also an opportunity for members to feedback on the issues that they – and their clients – are facing in order to give the Bank a clearer picture of how businesses are performing and might perform in the weeks and months ahead.”