24 Mar

Inflation rise will be temporary, says King

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.
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