Liz Cameron: Boost for businesses but it may be only temporary

This month's fall in the inflation rate is very welcome indeed and may buy our economy a little further breathing space before the Bank of England's Monetary Policy Committee (MPC) begins to ratchet interest rates back up towards more normalised levels.

Taken together with this week's record fall in retail sales, it is clear that there remain some substantial concerns about the robustness of the economic recovery and the ability of consumers to drive us forward through spending.

In these circumstances, it seems likely that the MPC may hold back from an expected base rate rise next month, until the evidence on inflation and the general performance of the economy become clearer.

This would be good news for businesses and for consumers, although savers would continue to suffer as a result.

One note of caution is that this fall in inflation may be temporary - as businesses are reporting pressures to raise their prices from the rising costs of energy, transportation and raw materials.

There is only so far that profit margins can be squeezed, particularly in the case of small and medium-sized businesses, and it is likely that this will lead to upward pressure on inflation over the summer, before a possible respite by the end of the year.

Let us not forget that, even with this current fall, inflation remains at double the government's target, while interest rates are at an historic low.

The MPC's primary task is to stabilise prices, and it will have to act sooner or later with a base rate rise.

For the sake of the recovery, let us hope that they can postpone the inevitable until we can say with confidence that the recovery is well under way.

• Liz Cameron is the chief executive of the Scottish Chambers of Commerce.