"Inflation was a little lower than expected in June and a little higher than expected in July. The important thing is that the overall trend of the past ten months has been downward and, with producer prices continuing to fall, we see no reason why this downward trend will not continue for the rest of the year and we fully expect inflation to fall back toward 2% during that time.
"One big issue for business will be the effect that the inflation figures have on future cost rises, including rail transport and business rates. This month's RPI figures are used to calculate the annual increase in regulated rail passenger fares that will apply for next January which will, as a result go up by 4.2%. Fares must be set at a level which makes rail travel an attractive transport option and Scottish rail customers must be able to correlate any increase in fares with a commensurate improvement in service. Automatic annual increases do not provide this link and this must be an important consideration in determining policy for a future rail franchise.
"The next important date for RPI is the September figure which, amongst other things, is used to calculate the annual increase in business rates. Having been hit with an inflation busting 5.6% increase this year, our hope is that inflation will fall quickly enough to minimise the additional burden on Scottish businesses next year."