Inflation stable but lingering concerns not alleviated

IPSE has responded to ONS data released today revealing that inflation has remained at three per cent.

In November, inflation hit a six-year high of 3.1 per cent, then fell to three per cent in December. Most forecasters predicted a modest fall to 2.9 per cent in January, but it remains at three per cent.

Andy Chamberlain, IPSE’s Deputy Director of Policy, commented: “Inflation is stable, but it is still concerning that it remains above the two per cent target set by the Bank of England.

“The cost of petrol has gone up and, although it has risen at a slower rate than this time last year, it is still concerning for freelancers who generally have to travel more often and further for their work. More positive for the economy in general is news that food prices are rising at a slower rate than before. 

“There is, however, no getting away from the sharp increase in inflation we’ve seen over the last few months. Both the Bank and the Government will want to push it lower. The Bank will now consider whether to raise interest rates and the Government will want to focus on improving the underlying economy.

“The Government's first priority at the moment, however, will be the Brexit negotiations. And the sooner it can reassure freelancers and the wider economy about potential risks the better. The Government must also carefully consider its approach to key issues such as employment status and IR35.

“With inflation one per cent above the target rate, productivity stagnating, and earnings not increasing, the economy is in a precarious position. Therefore, policies which dampen the vibrancy of the flexible labour market are likely to increase the strain on it.”