The Bank of England warns inflation is likely to stay above the 2% target throughout 2011, given the upcoming rise in VAT and continuing increases in import prices.
In today's Quarterly Inflation Report, it said there are "substantial risks" to the inflation outlook, including the impact of the coalition government's decision to raise VAT from 17.5% to 20% from 4 January. At its November meeting, the Monetary Policy Committee judged the near term outlook for inflation was higher than previously expected, in part reflecting higher import prices. CPI inflation was 3.1% in September. The Bank cautioned growth may slow in the near term, as a number of surveys of output growth and confidence were below levels seen earlier in the year, despite ...
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