PHILIP SHAW | INVESTEC
We are not especially fazed by the jump in inflation this month. There are clearly special factors involved. It is important to note that wage growth is very restrained and various measures of inflation expectations remain well behaved. The likelihood is that the UK is undergoing a period of inflation volatility.
ANDREW GOODWIN | ERNST & YOUNG ITEM CLUB
As the temporary effects wear off, we expect inflation to drift back down below target by the end of the year. The recovery is likely to be slow and will eat into little of the significant amount of spare capacity that exists, while wage pressures remain very subdued.
BENJAMIN WILLIAMSON | CEBR
While we expect inflation to remain above target for the next few months – meaning the governor may yet have to write more letters to the chancellor – significant competitive pressures and spare capacity in the economy are likely to see inflation fall back in the medium term.
HOWARD ARCHER | IHS GLOBAL INSIGHT
Given the extent of the spike up since last September, there is obviously the risk that inflation could be stickier than expected and not fall back as much or as quickly as hoped. Nevertheless, we believe consumer price inflation could well be back under two per cent by the end of the year and stay there during 2011.