INFLATION jolted back up in October, analysts predicted over the weekend, rising above the Bank of England’s target.
A one-off hike in tuition fees, combined with air fare increases – typically volatile – and steadily rising food prices will drive inflation on the consumer price index (CPI) above September’s 2.2 per cent, analysts forecast.
“Tuesday’s inflation figures, which look set to reveal a rise in CPI inflation from 2.2 per cent to 2.3 per cent, could provide a slightly uncomfortable backdrop for the Bank’s Inflation Report on Wednesday,” said Samuel Tombs at Capital Economics. “Indeed, the Bank’s forecasts are likely to show that inflation is expected to rise further above its target, and stay high for longer, than it thought in August.”
Other analysts suggested it might have reached as high as 2.5 per cent in October, and predicted it would take several months to fall back towards its two per cent target, the target governor Sir Mervyn King is tasked with achieving. “Our best guess is that consumer price inflation will stand around 2.5 per cent at the end of 2012, and will not dip below two per cent until the second half of 2013,” said Howard Archer at IHS Global Insight, citing moderation in oil prices and muted global economic activity to explain the steady decline.
Before October’s expected rise, inflation had been on a steady slide from last September’s high of 5.2 per cent – hitting 2.8 per cent in May and staying below three per cent since then.