LONDON (MNI) – The current elevated rate of UK inflation is partly
due to the rise in VAT at the start of 2011, Bank of England Monetary
Policy Committee Member Martin Weale said tonight.
In a question and answer session following a speech here, Weale
said that the rise in VAT had added around 1.0 to 1.25 percentage point
to the rate of inflation in January.
“The current elevated inflation rate is due to a number of factors,
one very important one was the increase in VAT which added something
like 1-1.25 pps to the inflation rate in January”.
He said that the BOE forecasts were based on the assumption that
there are not going to be any further increases in VAT, adding “That’s
one of the reasons we should be better (on inflation target) than we
have been in the past”.
Weale said that it was not in the MPC’s power to protect people
from rises in commodity prices and he issued a warning that future
sterling moves could impact on inflation:
“There may be further depreciations in the exchange rate…The
exchange rate may fall again and the way in which it moves could push
inflation way above where we expect or it could bring it down.”
–London newsroom: 00 44 20 7 862 7492; email:
wwilkes@marketnews.com
[TOPICS: M$B$$$,M$BDS$,M$$FI$,MT$$$$,M$$BE$]
