Inflation is likely to reach eight per cent in the coming months and perhaps even higher later this year, businesses in Milton Keynes have heard.

The Bank of England increased its interest rate to 0.75% last week, placing Bank Rate at its highest level since March 2020 when the Covid-19 lockdown began.

Businesses have been advised that some further rate rises may be appropriate in the coming months, but there are risks on both sides of that judgement, depending on how
prospects for inflation evolve.

Speaking at the latest Milton Keynes Chamber of Commerce roundtable, Rosie Smith, the Bank of England’s Agent in the East Midlands, said: “At the moment it is an incredibly difficult time following the Russian invasion of Ukraine.

“Not only is it a humanitarian tragedy, but it is also a shock to the global economy, putting pressure on supply chains in areas like metals, wheat and gas.

“Prices are rising as a result of these pressures and we are now looking at CPI inflation hitting eight per cent in the second quarter of this year.

“If the latest rises in gas and electricity futures prices are sustained, Ofgem’s household utility price caps, when reset in October 2022, could be around 35% higher.

“Unfortunately, household incomes will be squeezed by these rising cost pressures.

“Rest assured that the Bank’s Monetary Policy Committee will continue to set interest rates to meet the two per cent inflation target, and in a way that helps to sustain growth and employment.”

As well as hearing about the state of the economy, businesses from across the region spoke to Rosie on issues they are facing with the energy prices and difficulties to hire, but also on some of the opportunities for growth.

Robyn Allen, President of the Northamptonshire Chamber said: “At a time where costs are going up for businesses left, right and centre it is crucial for businesses to use organisations like the Chamber to amplify their voice of business”

“This week we heard from the Chancellor in the Governments Spring Statement and a lot was left to be desired for businesses facing an energy crisis, fuel rises and inflationary pressures”

“But hearing firms talking about their innovative solutions, collaborative ideas and plans for the future certainly brought home to me how inspiring our regions leaders are”

Sean Rose, Policy Executive at the Northamptonshire and Milton Keynes Chamber said: “It was great for our members to meet Rosie and receive an update on the Bank of England’s forecasts.

“This was also an opportunity for members to talk through some of the issues their businesses are facing – particularly in light of global events – and this will help to give the Bank a clearer picture of how firms in our region are performing and might perform in the weeks and months ahead.”