UK's inflation 'will not be runaway'

Thursday, March 4th 2010

The UK's rates of inflation are said to have been higher than in the majority of western countries, according to industry experts.

Editor of Investment and Business News Michael Baxter explained that the falling value of the pound and reversing the VAT cut are just two contributing factors to the high level.

But he added that there is no reason to believe that runaway inflation will ensue, because in relation to wages the rate is rather modest.

"I think the Bank of England is probably right when it says it is going to drop off quite sharply later in the year and next year – I think that's true," Mr Baxter continued.

His comments follow statistics from the Organisation for Economic Co-operation and Development released on March 2nd.

According to the figures, the UK's year-on-year inflation for January this year was 3.5 per cent.

This higher than that seen in all the other countries in Europe - except Turkey, Hungary and Iceland.