Inflation to remain high, Bank warns
The Bank of England has warned inflation is likely to stay above target in the near future, governor Mervyn King warned today.
Mr King warned “there will be plenty of opportunities to write letters” of explanation for the failure to chancellor Alistair Darling in the coming months.
Bank projections point to inflation staying over three per cent for until 2009 – and will not return to two per cent until 2010.
The Bank of England’s Inflation Report states: “In the central projection. GDP growth slows under the influence of weaker real income growth and tighter credit supply.
“But inflation rises further above the two per cent target and remains there for several quarters as energy and import prices pick up sharply.”
Today’s inflation report is bad news for Labour, whose supporters are becoming increasingly concerned a poorly performing economy for the rest of 2008 could make the next general election unwinnable.
There is some positive news, however, as inflation is predicted by the Bank to return to target in 2009.
“We must be patient,” Mr King said.
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