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Inflation levels concern Bank of England

Inflation levels concern Bank of England

Category: Economy

Updated: 21/04/2010
First Published: 21/04/2010

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This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
The Bank of England has admitted that rising inflation – currently at 3.4%, well above the government's 2% target – is a source of some concern.

Figures released earlier this week revealed that inflation increased from 3.0% in February to 3.4% in March.

Minutes from the Monetary Policy Committee's (MPC) monthly meeting revealed that inflation is likely to stay comfortably above the long term target of 2% for some time yet.

"Given that a period of above-target inflation was in prospect at a time when monetary policy was exceptionally accommodative, this was a source of concern for some members," said the MPC.

Rising inflation is hitting savers in the pocket, recent research conducted by Moneyfacts.co.uk found.

A basic rate taxpayer now needs to find a savings account paying at least 4.25% in interest to prevent their savings pot being eroded, of which there are currently just 44 available on the market.

For a higher rate taxpayer, the challenge is to locate a savings account rate of 5.64%, a return only currently available through four accounts.

It comes at a time when interest rates are at an historic low, further penalising savers.

Minutes from the MPC's meeting also revealed that the decision to freeze the base rate of interest at 0.5% - a level that level the measure has been marooned at since March 2009 - was taken unanimously.

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