UK inflation could hit 5% this year

According to the Bank of England, inflation could reach 5% later this year, driven higher by rising energy costs.

Energy costs are rising due to the surge in crude oil on the back of the ongoing political unrest in North Africa and the Middle East.

In its latest quarterly inflation report, the Bank said upward pressures remain on inflation.

Consumer Price Inflation (CPI) currently stands at 4%, falling from February’s 2-year high of 4.4%.

The rate is now double the Bank’s 2% target and it is expected to remain above target during 2012, according to Mervyn King, the Governor of the Bank of England.

In the meantime, it has revised its economic growth prospects for the UK. It now expects growth to be around the 1.75% mark for 2011, down from a previous forecast of 2%.

The latest growth forecast is now roughly in accordance with the Office of Budget Responsibility’s.

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