INDUSTRY NEWS

Inflation could reach 5%

Inflation could reach five per cent, according to leading economists, the Times has reported.

It said they believe rising energy prices could push inflation up almost one per cent to a 16-year high.

According to the paper, George Buckley, chief UK economist at Deutsche Bank, claimed if more energy firms followed British Gas and EDF Energy, CPI inflation would jump 0.9 per cent.

It reported Philip Shaw, UK economist at Investec, said the rise to five per cent could come as soon as next month.

Any inflationary increase would improve the likelihood of the Bank of England recommending a cut in interest rates.

"If the committee were seriously minded to raise rates, now would be the time to do it," commented Vicky Redwood of Capital Economics, the Times said.

At its most recent meeting, most of the Bank’s monetary policy committee noted[colon] "the risks to inflation in the medium term were most likely to be balanced by maintaining Bank Rate at 5.0 per cent".

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