Inflation 'likely to have exceeded 3%' - MPC

UK inflation is likely to have risen to around 3.5%, exceeding the Bank of England's (BoE) target for the third time.

Today's announcement means BoE governor Mervyn King is likely to be forced to write again to the Chancellor to explain why inflation is still above the 2% target. King attributed the upscale in forecast to the restoration of the VAT rate to 17.5% at the start of the year, higher petrol prices, and the continued depreciation of sterling. He expects inflation to remain "significantly above the 2% target in the near term", though added "the extent to which CPI inflation will deviate from the 2% target in the medium term is highly uncertain". Today's forecast is based on maintaing the ...