BoE falters again as inflation goes up steadily

An explanation is needed from Bank of England to tell as to what was the reason behind their underestimation of steeply rising inflation. The VAT rates are going up and so is the price of oil. Commodity prices along with food ones are not very different.

That is the reason why the consumer price index (CPI) has reached a rise of 4 per cent. This is worrying since the figures are double of what had been expected this time. Even the Retail Price Index (RPI) has seen a rise and is up between 4.8-5 per cent. This index also includes the house prices.

And since there is a lot of pressure, it also means that the governor Mervyn King will have to write a fifth successive letter of explanation to the Chancellor. Forecasts say that the inflation is expected to stay upwards-moving for fifth consecutive time. The rise will be somewhere between 4.5-5 per cent.

The bank's committee is expected to be wary of raising the prices because that is going to further slowdown the slow economic growth of the country. There are rumors that the rates are going to be raised by May as by that time, some more sustainability will be reached.