Inflation will rise faster than expected…(Got Food?!!)
The spectre of inflation will rear its head again this week when the official measure comes off its three year low and the Bank of England warns that prices will rise faster than expected in the coming year.
By Philip Aldrick
10 Nov 2012
he key consumer prices index (CPI) for October is expected to have reversed its recent fall to rise from 2.2pc in September to 2.5pc, when the Office for National Statistics publishes the figures on Tuesday.
In its three-monthly update on the economic outlook on Wednesday, the Bank will admit that inflation is proving to be more “sticky” than hoped. However, it is expected to sound a more positive note on UK growth than in previous reports.
Philip Shaw, the UK economist at Investec, said October’s inflation figures will have been affected by rising food prices and the tripling in university tuition fees, which will have an impact on the data for the first time. Recent increases in energy bills will feed into the November and December figure, potentially pushing inflation back up towards 3pc.
“We estimate that CPI could reach as high as 3.5pc by mid-2013. If our analysis is correct, it is not surprising that the MPC decided not to sanction further QE,” he said.