Pressure on Bank of England continues as inflation stays at five-year high

James Andrews, Director – Head of Investment Management at investment management and stockbroking firm Redmayne-Bentley, said:

“UK inflation has remained at 3 per cent (CPI) due in no small part to rising food prices, which rose across ‘all main classes of product’ according to the Office for National Statistics. This was slightly below the 3.1 per cent consensus expectation but continues to be at a 5-year high.

“The reading is unsurprising, and inflation is unlikely to drop back meaningfully any time soon given the rising oil price and the knock-on effects of the fall in the Pound post the Brexit referendum result. This continues to put pressure on the Bank of England with regard to further increases in the UK base rate, although with business investment and wage growth remaining subdued, the pressure is contained to headline inflation currently, which may not be enough to drive further rate rises just yet. The Bank will be nervous of negatively impacting economic growth at a time of increased uncertainty with regards to Brexit negotiations and the political landscape in general.”