Higher than expected inflation figures for last month do not mean interest rates should be increased, according to one expert.
Commenting on the fact that Consumer Price Index (CPI) inflation was at 3.8 per cent in June, David Kern, economic adviser to the British Chambers of Commerce (BCC), warned against a knee-jerk reaction.
He said: "The impact of higher interest rates on the real economy would be devastating, especially while all the evidence suggests that inflation will fall sharply later in the year and in 2009."
It is likely that inflation will continue to rise in the near future no matter what the monetary policy committee (MPC) does, he added.
For this reason, the MPC should keep rates on hold for the next few months and consider cuts later in the year when inflation has peaked, Mr Kern stated.
Yesterday, George Derbyshire, chief executive of the National Federation of Enterprise Agencies, claimed that business support services can help firms survive tough times by offering advice on how to handle a variety of situations.
