Inflation dips 'will ease strain on businesses'

The British Chambers of Commerce (BCC) has welcomed dips in the annual producer output inflation, claiming that it could ease the strain on businesses.

In June, the measure stood at 2.3 per cent - a considerable drop on the 2.9 per cent recorded in May.

Chief economist for the BCC David Kern argued that this would appear to indicate that the consumer price index of inflation is also likely to continue its downward trend in the near future.

The expert welcomed this trend, underlining the fact that tough fiscal austerity and the ongoing eurozone difficulties mean that falling inflation is the single most important factor to underpin demand in the UK.

"While the government perseveres with its deficit reduction plan, it should act forcefully to reallocate priorities towards growth," Mr Kern commented, adding: "This means more deregulation [and] supporting business lending."

Indeed, he recently asserted that this kind of policy, combined with the creation of a business bank, will facilitate access to finance and deliver growth.