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.
BoE 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.
