2013-07-16 London
UK inflation gives incoming Bank of England Governor a welcome gift
UK inflation has risen less than forecast, rising 2.9 percent from the same time last year, less than leading economists had predicted. Expectations had been that the rise would be around 3 percent.
The new Bank of England Governor, Mark Carney, has avoided having to write a letter of explanation to the Treasury, a requirement if inflation deviates more than 1 percent from the target, which is currently set at 2 percent.
The 2.9 percent level is largely due to airfares and food costs offsetting an increase in fuel prices.
Next month the new Governor will present the bank’s review of forward guidance as a way to maintain stimulus in the economy and fuel a recovery. Leading economists are predicting that inflation will still reach around 3 percent before reaching the 2 percent target towards the end of 2014.
