COMMENTING on the news that CPI inflation has fallen to 3.6% and RPI inflation to 3.9%, Liz Cameron, Chief Executive of Scottish Chambers of Commerce, said: "This sharp fall in inflation had long been anticipated as the effects of last year's rise in VAT dropped out of the equation. In addition, the Bank of England is expecting further falls in inflation during the course of this year.

"Lower inflation gives the Bank of England the leeway to continue its policy of low interest rates and Quantitative Easing until such point as the recovery begins to take hold. However it is becoming increasingly clear that this strategy requires to be backed up by action from the UK Government to deliver real support to businesses during a challenging year. We have already seen some positives in terms of infrastructure investment and reductions in corporate tax levels and next month's Budget must go further.

"One positive move would be a reduction in transport taxes to boost the competitiveness of our tourist sector and allow our airports to develop a more attractive package to bring new direct air services to Scotland. We must also look abroad to measure the success of schemes which deliver a lower rate of VAT for the tourist sector."