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New Inflation Figures Highlight Squeeze on Margins

Commenting on the CPI figures for March, released today, David Kern, Economic Adviser to the British Chambers of Commerce, said:

"Today's figures show annual CPI inflation at 2.5 per cent, the same as in February, and marginally below the 2.6 per cent figure expected by the market. Annual RPI inflation fell from 4.1 per cent in February to 3.8 per cent in March.

"The fall in RPI inflation and the relative stability in CPI are in sharp contrast with the figures published yesterday, which show record increases in producer prices and in raw material costs. Many businesses are clearly experiencing a serious squeeze on their margins and the position will get worse once a decline in house prices effects consumer spending.

"Although CPI inflation is set to increase in the near term there is a clear danger that sharply falling growth will push down UK inflation below target towards the end of the year and in 2009. The MPC must be more proactive and we urge it to cut rates to 4.75 per cent in May."

15 April 2008.

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