UK Inflation hits 3.5% forcing King letter to Chancellor

Mervyn King, the Governor of the Bank of England, has been forced to write his sixth letter to the Chancellor after new data revealed that inflation rose further above target to 3.5 per cent in January.[mserve id=”Central_Bank_BOE_King.jpg” align=”left” width=”200″ caption=”BoE Governor King” alt=”Central Bank of England Governor Mervyn King” title=”Bank of England Governor King”]

The Office for National Statistics (ONS) said that consumer price inflation rose from 2.9 per cent in December to its highest level since November 2008 after petrol prices increased and VAT returned to 17.5 per cent last month.

The Governor must write to the Chancellor when inflation moves more than one percentage point above or below the Bank’s 2 per cent target, and every three months after that while inflation stays outside this threshold.

In today’s letter, Mr King reiterated the Bank’s forecast that the rise in January is a temporary surge in inflation, which would fall down to the target in the second half of the year.

Times Online

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza