Cost Pressures and the UK Inflation Outlook

Abstract

In this speech, Kate Barker, member of the Bank's Monetary Policy Committee, discusses the impact on UK monetary policy of rising global prices (for energy and metals in particular) and higher export price inflation in the United Kingdom's trading partners. She argues that the outlook for the United Kingdom may be that output remains a little below trend in 2006-07, implying a risk of CPI inflation below target in two years' time. But in the short term there are still upward price pressures from energy and import prices, and it is too early to conclude that there will be no upward impact on nominal wages from higher inflation.