Scotland business

Scots warned of 'difficult 2017' over inflation rise

Sterling Image copyright Thinkstock
Image caption Prices are rising as the cost of imported goods adjust to the lower value of sterling

Scots are facing a "difficult 2017" of higher prices and lower wage growth following the collapse in the value of sterling, according to a report.

Accountants and business advisers BDO LLP found inflation was expected to continue over the next few months, leaving consumers with less to spend.

The price of many imported goods is rising as they adjust to the lower value of sterling.

The decline of sterling has also knocked business confidence, BDO said.

According to the Business Trends Report, the inflation index is at its highest level in more than three years - climbing to 102.8 in October from 102.1 in the previous month - and above the long-term trend of inflation at 100.

The BDO's output index, which indicates how businesses expect to perform in the three months ahead, fell to 96.6 from 96.9.

Martin Gill, head of BDO LLP in Scotland, said: "Rapidly rising inflation is quickly going to hit the pockets of Scottish consumers, affect the profit margins of businesses and ultimately slow the growth of the economy.

"The Nissan and Hinkley announcements are a positive start post-Brexit for the UK as a whole but the Scottish government needs to inject greater confidence back into the Scottish economy.

"We need a positive Autumn Statement and Scottish government budget in December that highlights immediate investment in infrastructure to help soften the blow to both consumers and businesses, and to encourage growth."

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