Commenting on the release of official data which shows that the CPI rate of inflation was 1.0% in November, Liz Cameron, Chief Executive of Scottish Chambers of Commerce, said:
“Inflation in the UK has now fallen to a twelve year low of 1.0%, not experienced since September 2002. This fall in prices is evidence of an increasingly competitive business environment where businesses compete on price, with consumers looking for the best value possible while household incomes are squeezed.
“The recent announcement in November that inflation in the Eurozone reached lows of 0.3% is further evidence of wider economic difficulties. Examples of slowing growth and in some cases contracting Eurozone economies are already having a damaging impact on the Scottish economy and its exports.
“This record low of inflation means that it is absolutely crucial for business and the economy that interest rates are not increased, particularly given the risk of deflation. Entering a period of deflation would be detrimental to the UK economy, potentially reducing consumer spending at a time when economic recovery is still in its early stages, and causing interest rate targeting to become ineffective.