"The UK's inflation rate will rise above 3% in the coming weeks, the governor of the Bank of England, Mervyn King, has predicted.
Presenting the Bank's quarterly inflation report, Mr King said the increase in VAT and higher petrol costs would push up prices.
But, he added, inflation would then quickly fall back below the 2% target.
The governor said that he expected "a gradual recovery" in the UK economy over the coming year.
In December the official rate of inflation reached 2.9%. If inflation moves above 3%, the governor is required to write a letter of explanation to the chancellor. "
Remember a year ago the Bank of England was predicting that would inflation would fall into the range 0 to 1% pa, with a significant risk of outright deflation? I didn't believe them then and I doubt anyone is expecting deflation now. As I have said over and over again this Labour government's legacy will be just like previous Labour government's legacies - inflation; all that is in doubt is how high the inflation rate will rise and how long it will take to tame.
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