With recent ONS figures showing inflation at a 40-year high, the impact on businesses and consumers will be felt.

This is the most recent challenge to commerce after Brexit, pandemic recovery, and the war in Ukraine, and has sparked concerns for the future of our economy.

The figures for June 2022 show inflation is at 9.1 per cent, with the TaxPayers’ Alliance saying it’s taking its toll on taxpayers, calling on the government to issue tax cuts amid the cost-of-living crisis.

Suzanne Caldwell, managing director at Cumbria Chamber of Commerce, offered much-needed insight:  “Consumers and businesses can only cut so far and in the extreme, you’re in a position where businesses are shrinking or closing and people are losing their homes, for example, so it is potentially very serious indeed and we should all be mindful of that.

“The situation isn’t expected to improve quickly.

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“While things should start to moderate next year it’s likely that we’ll still be looking at inflation of almost twice the Bank of England target at the end of next year – but that’s a much better position than we’re in now.

“We’re unlikely to be down to the target rate of 2 per cent until the end of the following year, and remember that inflation is about price increases not the prices themselves so lower inflation isn’t the same as lower prices. 

“It's a really difficult issue to address because international issues such as fuel and commodity prices won’t be impacted by our domestic interest rates."
“That said the Government could make a real difference through a significant cut in fuel duty, for example."

Fuel duty is a fixed amount per litre, or per kilogram in the case of liquefied gases, and the recent cut equates to 8.6 per cent.

The secretary of state for business, energy and industrial strategy has asked the competition and markets authority (CMA) to conduct a swift, high-level review of completion in the fuel retail market.

Suzanne said the government should reduce fuel duty more than they have already, and also reduce VAT on fuel.

Chancellor Rishi Sunak implemented the 5p per litre cut in fuel duty in March to reduce the price of fuel for motorists.

Current rates of fuel duty are just under 53 pence per litre, or between one-third and one-quarter of the pump price.

Last year this raised the government nearly £26billion.

Suzanne continued: “From a Cumbrian perspective of course many of us have no choice but to get in our cars to get to work, or anywhere else, given the lack of other options in many rural areas.

“While it’s understandable that at a time of high inflation (and a tight labour market) many people are pushing for wage rises, higher wages put additional pressure on business costs, which impacts further on prices, so we get into a wage-price spiral which isn’t helpful for anyone.”

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