Business world awaits inflation news

INFLATION is expected to nudge closer to the Bank of England’s 2% target when new figures are released this morning.

The Bank of England’s latest forecast is that the headline CPI rate of inflation will fall to around 2.1% by the end of the year.

CPI inflation has been falling since its September 2011 peak of 5.2% although some analysts have expressed concern it has not declined faster given the lack of growth.

If inflation remains high it will limit the ability of the Bank of England’s Monetary Policy Committee (MPC) to take fresh action to stimulate the economy.

In June, CPI inflation stood at 2.4% while the RPI measure, which includes housing costs, was 2.8%.

One of the members of the MPC – Martin Weale – was in Birmingham this morning to meet business leaders. He was given the message that interest rates should remain low to allow businesses to stay competitive in a difficult economic climate.

TheBusinessDesk.com will send out an alert once the inflation figure is revealed later this morning.