Inflation tells tale of two worlds

Although short-term inflation is being pushed higher than the Bank’s consumer price index (CPI) target of 2%, this is likely to come down as energy prices subside from their recent peaks. Economic growth will not swing much either way, with GDP expected to increase below the trend growth level in the short term, before recovering somewhat. Although the report has been published following the impact of hurricane Katrina on the US oil industry, the Bank’s figures for the three months to August suggest the oil price will maintain its increase at a “moderate” pace. Key to any growth in...