High employment costs will keep inflation above target
Responding to the latest Bank of England decision on interest rates, and the Quarterly Monetary Policy Report, Helen Dickinson, chief executive at the British Retail Consortium, said: “Borrowers must wait at least another month to see if mortgage costs come down, adding to the squeeze on consumers, who also face high food prices and rising unemployment. The MPC was clear that inflation, particularly in food, remains above target as a result of elevated ‘wage and price pressures’. This is of no surprise to retailers who have had to absorb billions in extra costs following the increase in employer National Insurance Contributions, higher wage bills, and a new packaging tax.
“While the Bank may expect inflation to ease in the coming months, this could be impacted by new government policies. The big one on the horizon is the Employment Rights Act. Several proposals within the new Act – such as on guaranteed hours – could create a substantial cost and administrative burden for retailers, while limiting job flexibility and employment opportunities. By working with retailers to design policies which work in the real world, government can get the implementation right and raise standards without harming entry-level and flexible jobs, or pushing inflation back up.”