Inflation in UK to rise to 5 per cent: BoE economist
30 Sep 2011
The Eurozone crisis is again in the spotlight after German chancellor Angela Merkel secured a crucial vote for the next round of the Greek rescue package in the Bundestag.
However, analysts say there was a danger of overlooking a less momentous but dangerous development.
They say this concerns inflation or rather the associated risks of becoming too complacent about it.
Economist Spencer Dale, one of the more hawkish members of the Bank of England's interest rate setting monetary policy committee (MPC), who spoke to the Daily Mail, said he expected inflation to rise to 5 per cent from its current level of 4.5 per cent, or over twice the bank's target of 2 per cent.
According to both Dale and his boss Mervyn King, inflation was likely to keep rising due to the increase in VAT, the surge in oil and utility bills and the weakness of the pound, which made imported goods more expensive.
Meanwhile, the MPC believed that the risk of high inflation would be outweighed by the risks to growth, and had no plans to increase interest rates.
