Bank of England Governor Mervyn King feels weakness in sterling could be at the root of the higher than expected inflation data for February and still expects to see the CPI rate come down quickly this year.
In his explanatory letter to the government King wrote “February’s inflation out turn is somewhat higher than expected” adding “That could reflect the pass-through of the exchange rate depreciation to consumer prices since much of the strength in the out turn appears to be concentrated in components where a large share of goods is imported.”
