Business leaders want rates freeze after inflation dip

Deputy Business Editor

Wednesday 17 October 2012

SCOTTISH Chambers of Commerce has called for business rates to be frozen following a drop in UK inflation rates.

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GREIG CAMERON DEPUTY BUSINESS EDITOR

Data from the Office for National Statistics shows consumer prices index (CPI) inflation was at 2.2% in September. That was down from 2.5% in August and the slowest since the 1.9% seen in November 2009.

The retail prices index (RPI) inflation slid from 2.9% in August to 2.6% in September.Liz Cameron, chief executive of Scottish Chambers of Commerce, said: "While it is good news that the headline rate of inflation is falling towards the target of 2%, the important news for Scottish businesses is the RPI rate of inflation has come down to 2.6%."This is the figure the UK Government traditionally uses to calculate the annual inflationary increase in business rates, with the Scottish Government following suit."We believe it is time the Scottish Government broke free from its self-imposed shackles to the UK Government and took a bold step in protecting Scottish businesses from yet another inflationary rise."This year, Scottish businesses have had to pay 5.6% extra in rates, based upon the unfortunate coincidence that RPI inflation in September 2011 hit a 20-year high price spike. "This year, the Scottish Government has the opportunity to make up for this and deliver a much-needed break to hard-pressed businesses the length and breadth of the country by freezing business rates for 2013/14."The Scottish Government said it would soon be launching a consultation on business rates and was committed to matching the English poundage rate during the current Parliament. Economists warned the recent downward trend in inflation may be coming to an end.Vicky Redwood, at Capital Economics, said: "The fall is likely to be the last for a while. "Inflation might now edge up a bit over the next couple of months. Recently announced utility price increases will add 0.1% to inflation for each of the next three months. And food prices could start to rise as past commodity price increases feed through, while the rise in tuition fees will boost inflation in October. "However, inflation should stay pretty close to the 2% target and we still expect it to fall below 2% further ahead in response to the weakness of demand and spare capacity in the economy."The fall in inflation gives the Bank of England greater scope to increase its quantitative easing, with some economists expecting a further £50 billion injection into the economy before the end of the year.

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Business leaders want rates freeze after inflation dip

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