Increase in CPI not as bad as it looks, says IoD

Dated: 17 May 2011

Commenting on the latest inflation figures, Graeme Leach, Chief Economist at the Institute of Directors, said:

“In the words of the Prime Minister, ‘calm down dear’. The increase in the CPI (Consumer Price Index) is not as bad as it looks. Yes, core inflation has accelerated sharply and the headline rate is likely to rise even further to 5 per cent or more over the coming months, but there’s no need to panic. We still believe inflation will fall sharply next year.

“The real concern would be if the current inflation increase triggered an upward wage-price spiral, but there is no evidence of this. Raising interest rates now would risk a double-dip recession and sharp swing from inflation towards deflation in 2012-13. We shouldn’t forget that broad money supply growth is signalling a very strong risk of deflation in the medium term. We’re worrying too much about today when we should be thinking of tomorrow.”

ENDS

Contact Points

Edwin Morgan
Media Relations Manager
Institute of Directors, 116 Pall Mall, London SW1Y 5ED
Tel: +44 (0)20 7451 3392
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Email: edwin.morgan@iod.com
Website: www.iod.com/policy

Notes to editors

  • The IoD (Institute of Directors) was founded in 1903 and obtained a Royal Charter in 1906. The IoD is a non-party political organisation with upwards of 45,000 members in the United Kingdom and overseas. Membership includes directors from right across the business spectrum – from media to manufacturing, e-business to the public and voluntary sectors. Members include CEOs of large corporations as well as entrepreneurial directors of start-up companies.
  • The IoD offers a wide range of business services which include business centre facilities (including ten UK regional centres [three in London, Reading, Birmingham, Cardiff, Manchester, Nottingham, Edinburgh and Belfast] and one each in Paris and Brussels), conferences, networking events, virtual offices and hotdesking, issues-led guides and literature, as well as free access to business information and advisory services and a comprehensive Information Centre. The IoD places great emphasis on director development and has established a certified qualification for directors – Chartered Director – as well as running specific board-level and director-level training and individual career mentoring programmes.
  • In addition, the IoD provides an effective voice to represent the interests of its members to government and key opinion-formers at the highest levels. These include ministers, constituency MPs, Select Committee members and senior civil servants. IoD policies and views are actively promoted to the national, regional and trade media.
  • For further information, visit our website: www.iod.com
  • You can also keep up to date with the latest views from the IoD on twitter.com/The_IoD and at blogs.iod.com