Falls in inflation is good news for Scottish economy

Commenting on the release of official data which shows that the CPI rate of inflation fell back to 1.5% in May, Liz Cameron, Chief Executive of Scottish Chambers of Commerce, said:

“Inflation remains well within the Bank of England’s target and this ought to ease the pressure for an early rise in interest rates.  The priority for the Scottish economy is to nurture the signs of increasing business investment that will help to put Scotland back on the road to sustainable levels of growth.

“Our economy is headed in the right direction but for the moment it still requires the support that the Bank of England is providing.  A move towards more normalised levels of interest rates ought still to be some way off.

“Although there is further evidence this month of rising house prices, it is again notable that there is a remarkable disparity between London, where prices have risen by 18.7% in the year to April and Scotland, where the figure is a more modest 4.8%.  It is essential that where this is addressed by the Bank of England, it is done other than through interest rate rises as the expanding house price bubble is exceptionally localised and will need well targeted measures.”