16
Sep
Inflation 'near peak'
Inflation is close to its peak and may be expected to fall soon, it
has been suggested.
The Office for National Statistics (ONS) revealed today that the
consumer prices index (CPI) rate had risen from 4.4 per cent in
July to 4.7 per cent in August.
Further increases in food and domestic energy inflation have pushed
up the rate, although falling oil prices are starting to bring down
the cost of petrol.
As it was the fourth month in a row that CPI had exceeded its
permitted ceiling of three per cent, Bank of England governor
Mervyn King has had to write another explanatory letter to the
chancellor Alistair Darling outlining why this is and what the
monetary policy committee (MPC) will do about it.
While making no commitment to action by the MPC, he forecast that
inflation will "soon" peak at around five per cent and is likely to
fall rapidly in 2009.
Such a situation could help the MPC to make several base rate cuts,
lowering the cost of mortgages as a result.
This scenario was predicted by Richard Hunter, a stockbroker at
Hargreaves Lansdown, who told the BBC the latest CPI figure may be
an "indication" that the peak is near and permit a "loosening" of
monetary policy soon.
