Lower inflation rate likely to ease business rates increase for retailers

• RPI inflation rate likely to be 0.7% this September
• Business rates increase across all sectors likely to total £200m
• Business rates have risen by 20% since 2011

The industry has suffered steep increases for five years and the burden has led to the closure of some businesses.

After rising by 20% since 2011 to take the total this year to a likely £28bn, the next increase is likely to amount to less than £200m across all business sectors according to the Mail on Sunday.

Consultancy Capital Economics forecast that September’s Retail Prices Index measure of inflation, on which annual business rate rises are based, will go up by 0.7% compared with 2.3% in September 2014.

The business rate increase for retailers, who have long lobbied for changes to the system because of the burden it imposes upon them, would likely be about £50m.

However business rates campaigner Paul Turner-Mitchell said that independent shops could still suffer because temporary business rate relief worth an estimated £284million is due to end next year.

Anticipating a fall in inflation, senior UK economist at Capital Economics Samuel Tombs said: ‘Supermarket competition should drive petrol prices down before long and British Gas will cut its gas prices by 5% in late August with other utility companies likely to follow suit.’

The likely RPI inflation rate slowdown from an average rate of 1% so far this year is also likely to mean the Bank of England keeps interest rates on hold.