14 Oct

Inflation shows signs of passing peak, states MPC member

Inflation shows signs of passing peak, states MPC member

A member of the Bank of England's monetary policy committee (MPC) has outlined some of the reasons the body expects inflationary pressures to keep falling.

Speaking yesterday, Andrew Sentance observed that a number of factors that had caused inflation to be more persistent in the past - such as high wage demands and an imbalance between the growth in the money supply and the availability of consumer goods - are not present in the economy now.

Adding that oil prices are also falling, he said the MPC "can be much more confident than we were a few months ago" that inflation should drop in the months ahead.

Such a situation may enable the Bank to cut interest rates again, which could help bring the cost of mortgages down further.

The consumer prices index (CPI) rate of inflation hit 5.2 per cent today, the Office for National Statistics revealed.

However, Mr Sentance had predicted in his speech that CPI will peak at around this level before falling.

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