This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.bbc.co.uk/go/rss/int/news/-/news/business-13357282

The article has changed 6 times. There is an RSS feed of changes available.

Version 0 Version 1
Higher energy bills threaten to push inflation rate up Inflation report warns of impact from higher fuel bills
(40 minutes later)
The governor of the Bank of England, Mervyn King, has warned that higher utility bills could push inflation to 5% later this year.The governor of the Bank of England, Mervyn King, has warned that higher utility bills could push inflation to 5% later this year.
Publishing the bank's latest Inflation Report, he said there remained strong downward pressures on economic growth and upward pressures on inflation. Publishing the Bank's latest Inflation Report, he said there remained strong downward pressures on economic growth and upward pressures on inflation.
However, he said that the "big picture" had not changed much since the last report in February.However, he said that the "big picture" had not changed much since the last report in February.
The Bank still expects inflation to fall back in 2012 and 2013.The Bank still expects inflation to fall back in 2012 and 2013.
Several analysts have said they expect domestic fuel bills to rise this winter. The Bank said the slightly gloomier outlook for economic growth reflected not just the dampening effects of high energy costs but also "very weak" consumer spending.
On Monday Centrica, which owns British Gas, said domestic prices did not reflect what the company pays on the wholesale market. It downgraded its expectations for gross domestic product in 2011 to around 1.75%, from around 2% in February.
'Uncertainty'
Mr King said there was "a great deal of uncertainty about the outlook for inflation".Mr King said there was "a great deal of uncertainty about the outlook for inflation".
It meant that inflation "may not fall back as strong as expected", he said.It meant that inflation "may not fall back as strong as expected", he said.
Higher inflation - probably 5% later this year - and lower growth. That was the sobering headline from the Bank of England's Inflation Report.
On inflation, the governor blamed the surge in fuel prices in recent months - he said some utility bills could rise 15%.
The Bank's growth forecast is now more in line with the Office of Budget Responsibility's. The Bank's dilemma is as acute as ever - sluggish growth and inflation way above target. Those who anticipate an interest rate increase in November will stick with that. But there's still plenty of scope for the outlook and the Bank's thinking to change by then.
The Bank's latest Inflation Report has "pencilled in" an assumption that gas prices may rise 15% and electricity prices by 10% this winter.The Bank's latest Inflation Report has "pencilled in" an assumption that gas prices may rise 15% and electricity prices by 10% this winter.
Higher food costs were also contributing to inflation's rise this year. Several analysts have said they expect domestic fuel bills to rise this winter.
Despite these short-term impacts on inflation, Mr King said: "Our medium term judgement about inflation and growth is broadly the same as in February." On Monday Centrica, which owns British Gas, said domestic prices did not reflect what the company pays on the wholesale market.
However, the Bank still expects such cost pressures to ease and for inflation to begin falling to its 2% target next year. Higher food costs were also contributing to inflation's rise this year, the governor said.
Despite these "short-term" and "volatile" factors, Mr King said: "Our medium term judgement about inflation and growth is broadly the same as in February."
However, the Bank still expects such cost pressures to ease and for inflation - currently 4% - to begin falling to its 2% target next year.
He underlined that there were other factors pulling on inflation, especially low pay rises and weak economic activity. "Wage and money growth, at around 2%, continue to be weak," he said.
But this "softness" in economic activity is likely to be temporary, with a recovery in output likely to be driven by a continuing rise in business investment and a positive contribution from net exports", he said.