Inflation is set to rocket, says King
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Bank of England governor Mervyn King has warned that inflation is likely to rise sharply in the next few months.
In the Bank’s latest quarterly inflation report King says: “Inflation has been unusually volatile recently. It is currently 1.1%, having been 5.2% only a year ago. Such volatility is likely to continue in the short run.
“Inflation is likely to increase sharply in the next few months to above target, reflecting higher petrol prices and the reversal of last year’s reduction in VAT.”
He adds that the economy is facing a period of balance sheet adjustment and until that has taken place the supply of credit will be impeded.
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