Inflation to surge to 3.5% this year - think-tank

In its latest forecast for the UK economy, the National Institute of Economic and Social Research ((NIESR) says CPI inflation will soon rise to 3.5% from 2.9% as the reversion of VAT from 15% to 17.5% feeds through to prices. Such a development will see the Governor of the Bank of England write to the Government to explain what action it is taking to control prices. But according to the think-tank, the rise in inflation will only be temporary, with the CPI measure averaging 1.7% in 2011. "Underlying inflation has been raised by the depreciation of the pound, but the spare capacity ...