8 Oct 2014

IER predicts inflation up to 2.5 percent

7:29 am on 8 October 2014

Businesses' expectations of costs and prices suggest inflation will kick up to about 2.5 percent by early next year.

But the Institute of Economic Research says that level will be short lived.

Inflation in the year ended June was 1.6 percent.

The institute's latest quarterly survey of business opinion found firms' expectations about their own activity - a reliable indicator of future economic growth - eased from a net 32 percent expecting good times ahead to 29 percent.

A net 21 percent were expecting their costs to rise and 29 percent expected their own prices to increase.

The institute's principal economist, Shamubeel Eaqub, said the question was whether higher prices would stick if there was insufficient demand.

However, Mr Eaqub said there was no need to panic about the economy.

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