Households ‘are feeling the pinch of high inflation’

INFLATION Ken Moon of the Federation of small Businesses.  Picture: Ian Hargreaves (073165-1)
INFLATION Ken Moon of the Federation of small Businesses. Picture: Ian Hargreaves (073165-1)
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THE Government needs to introduce a fuel duty stabiliser and tackle rising energy costs, the Wessex Federation of Small Businesses has said.

The call came after the Bank of England reported yesterday that inflation had fallen slightly from 5.2 per cent to 5 per cent.

Falls in the price of food, air transport and fuel helped to push the inflation rate lower.

But it is still well above the target of 2 per cent inflation.

In an open letter to Chancellor George Osborne published yesterday, the Bank of England blamed the high rate on soaring energy bills, the increase in VAT to 20 per cent at the beginning of the year, and the rise in the costs of imports.

And the Federation of Small Business says the situation will continue into the new year, when VAT rates are expected to be reduced.

Ken Moon, chairman of the Wessex branch of the FSB, which covers the Portsmouth area, said: ‘Although a positive sign that inflation has fallen slightly, it remains to be a cause for concern.

‘Combined high energy prices and the impending fuel duty rise will continue to have an impact on businesses and households alike into the new year.’

Mr Moon added that workers will feel the pinch as wages cannot be increased by cash-strapped employers to match inflation.

He said: ‘With many employers unable to pay a wage increase, above target inflation will pile pressure on already cash-strapped households.

‘We urge the government to introduce a true fuel duty stabiliser and to review the price increases in the energy market in order to help households and businesses better plan their finances.’