24
Mar
Inflation rise will be temporary, says King
The rate of consumer prices index (CPI) rose last month from three
per cent to 3.2 per cent, the Office for National Statistics (ONS)
revealed today.
However, the governor of the Bank England Mervyn King has suggested
this does not herald an upward trend in inflation.
Were CPI to rise consistently, the Bank could respond by raising
interest rates, which might lead to mortgages becoming more
expensive.
The ONS stated that the rise - the first in five months - had been
caused by factors such as higher prices for fruit and vegetables,
meat and some drinks, leisure services, transport costs, furniture
and footwear, all of which saw greater increases than a year
ago.
Writing the obligatory letter to the chancellor because the rate
had jumped above three per cent, Mr King said: "We believe that the
sharp decline in CPI inflation since September is likely to resume
in the coming months."
This may suggest that there is no imminent prospect for any
increase to the base rate, which is currently at 0.5 per
cent.
