By spring inflation could ‘comfortably exceed’ 5% when energy bills are to rise even further

The Bank of England’s (BoE) deputy governor has warned on Monday that inflation could “comfortably exceed” 5% by spring which is when energy bills are to rise even further.

Ben Broadbent said during a speech in Leeds that due to the labour market being tight this will also be a likely factor with a persistent source of inflation.

In October the Consumer Price Index (CPI) came in at a near-decade-high of 4.2% which skyrocketed from 3.1% the month before.

The 4.2% rate of inflation is more than double the BoE’s Monetary Policy Committee’s (MPC) target rate of 2%, which is set to further rise.

Broadbent said, “Despite relatively weak growth over the past two years as a whole, domestically and globally, inflation has risen very significantly. In this country it was over 4% in October.

“In the spring of next year, when the next rise in the Ofgem cap on gas and electricity bills comes through, it will probably climb comfortably through 5%, a long way north of the MPC’s 2% target.”

Broadbent warned that the recent rise in inflation for goods, which has, in part been caused by supply chain pressures, is likely to fade and potentially reverse before a rate rise would have an impact.

He added, “I still think it’s more likely than not – looking a couple of years ahead, as we should – that these pressures on traded goods prices are more likely to subside than intensify.”