The CBI has released a response to the Inflation Report issued by the Bank of England.
Lai Wah Co, CBI head of economic analysis, said: ‘The bank’s latest Inflation Report highlights the significant uncertainties in the outlook for UK growth and inflation over the next couple of years.
‘The bank’s growth forecast has been lowered to reflect the fiscal consolidation announced in the emergency Budget. But further signs of a softening in the pace of the global recovery over recent weeks will have increased the downward risks to UK growth.
‘Meanwhile, although UK inflation is starting to come down, it has been surprisingly high over the past year. It is unclear whether inflation expectations will continue to creep up, especially as the January VAT rise is likely to leave it above target throughout 2011.’